1099-NEC for single consigned art sale? (asking as consignor)

Forum|Forum|1 year ago
March 5, 2025
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I contracted with a gallery to sell a single inherited collectible on consignment. It was sold for more than $600 above the cost basis (valuation as of inheritance).

My assumption was that I would report this/pay for it as a long-term capital gain off of the cost basis. However, I've received a 1099-NEC from the gallery (for the amount I was paid—ie, sale price minus gallery's percentage).

It seems like this means I have to file like I am running a business, which I am not in any sense of the word. Did I get the wrong form/am I misunderstanding? Should they have issued a 1099-Misc or a different form? Any advice appreciated.

Not A Product Question

Best answer by MAK70

You can report the sale as a capital sale- you are not responsible just because you received the incorrect form from the gallery. It is possible that the 1099-NEC would work with a gallery-type sale. The most important thing is that you report correctly on your tax return.

To enter as an investment sale:

Under Federal Wages& Income, select Stocks, Cryptocurrency, Mutual Funds, Bonds, Other (1099-B) under Investments and Savings.

Did you have investment income in 2024? YES
Let's import your tax info Enter a different way
OK, let's start with one investment type Other Continue
Tell us more about this sale 199-NEC Continue
Now, enter the sale information and Continue

MAK70Answer

To enter as an investment sale:

Under Federal Wages& Income, select Stocks, Cryptocurrency, Mutual Funds, Bonds, Other (1099-B) under Investments and Savings.

Did you have investment income in 2024? YES
Let's import your tax info Enter a different way
OK, let's start with one investment type Other Continue
Tell us more about this sale 199-NEC Continue
Now, enter the sale information and Continue

userID_204Author

Thanks. So, to be clear, you'd recommend simply using "1099-NEC" as the "Enter the name of the person or financial institution that brokered this sale?" Or perhaps "1099-NEC [[Consigner Business Name]]" instead?

I have a related question re state taxes on the same form. The consigner (payer) was in one state; I live in another. The consigner filled out the 1099-NEC with box 6 (State/Payer's state no.) as my state. Should I enter this as the "State Name" on the page where I enter transaction info/is that needed?

I believe that I probably owe taxes in the payer's state, based on my understanding of state-based income and income thresholds for that specific state. So, I expect I should fill out that state's return accordingly? I just want to make sure I'm not going to get dinged by one state or another because that field is filled in.

Many thanks!

PatriciaV

Employee

Yes, use the name of the consignment business for the source of the 1099-NEC. The state section (if any) on the 1099 should be where the income was generated, not your home state.

And, yes, you may need to file a nonresident state income tax return for the net income from the sale. You might check with the state to see if the amount exceeds the minimum to file a state return. Here's a list of State Departments of Revenue.

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