Ebay Sales

Forum|Forum|3 years ago
August 31, 2022
1 reply
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I sell part time on eBay by purchasing used items at garage sales and flea markets. Can I deduct the cost of the item from the sale when finalizing my taxes? Most of the items I purchase are cash transactions. How is the best way to handle this? Any ideas would be appreciated.

Thanks for hosting this.

KochuK

Hi mgrlvr, thanks for posting the question.

Generally, you cannot deduct cost of purchases that you cannot support.

Below is a list of proper documents -

Quote

Documents reporting the cost of inventory include the following.

•Canceled checks.

•Cash register tape receipts.

•Credit card sales slips.

•Invoices.

These records will help you determine the value of your inventory at the end of the year.

page 12 of https://www.irs.gov/pub/irs-pdf/p583.pdf

For past cash basis purchases, you should re-construct a purchase ledger, listing items, dates, prices paid and location of purchases. However, they may be rejected in case of an IRS audit.

Hope the above helps.

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mgrlvrAuthor

Thank you for the reply.

I have many items that were purchased in the past 10 - 15 years. Everything costs something when acquired. I can now understand the new reporting and the need to keep records of the amount paid for an item going forward. Is there any way of recovering my cost for each item? The new requirement seems to penalize one for past purchases.

Thanks,

KochuK

Apologize that I don't have better news. What I described above is always the rule, i.e. need documentation to substantiate cost/expenses at time of an IRS audit or risk the cost/expense being denied.

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