1099-K - Daughter or Adult

[mayday23]

My daughter sold her used American Girls on eBay for about USD$2K and it will trigger a 1099-K from eBay. These were not sold at a profit, but sold used and I don't have receipts from the original purchase.

Unsure of tax time if this will be considered a "garage sale" type transaction or it will hit income.

Should I put her SSN in eBay or mine? My thinking is if it is in her name and it's income then I can put that same amount into a Roth for her.

They were her dolls and she did the leg work of taking pictures, getting them sale ready, etc.

MFJ, top tax bracket.

[Jack FFR1846]

My son had a K1 selling lego stuff. Similar kind of money. We sent to our tax preparer the K1 along with the remembered original cost which was always higher than what things sold for. We paid no tax. If she had no income, she would not be able to put money into a Roth. We had no receipts.

[livesoft]

Roth IRA contributions come from earned income and not from realized capital gains.

https://www.irs.gov/newsroom/form-1099- ... ns-general

[vnatale]

Seems like you are getting good information here.

1) You can use estimated expenses to show that there was no net income (profit) on the sale. Of course, the IRS could challenge it upon audit but this seems like too small an amount to trigger an audit on its own.

2) You can only do a Roth contribution on net income, not just income. Which you are saying you did not have. If there had been net income then that net income would have to come under the guise of doing a business, like your daughter is now in the business of doing something which included selling these and there is an ongoing business.

[Mullins]

I believe you'll claim the income as Other Income, with an attachment deducting the cost, which will zero it out. In that way, the 1099-K is accounted for on the return. If it's your child's return, their standard deduction may cover the amount anyway but perhaps not on the state return, but I'd still create that attachment for good measure. I'm not a CPA but I did hear this method discussed by a CPA.

[chemocean]

Use schedule D (sale of property) and form 8949 with zero capital gains. This method records the 1099 on tax return for the SSN on the 1099. Put the cost (column e) equal to the proceeds listed on the 1099 (column d) with zero capital gains (column H). A previous BH pointed out that you can not claim a lost for sale of property used for personal use, with a few exceptions (see instructions for schedule D).

[toddthebod]

Use schedule D (sale of property) and form 8949 with zero capital gains. This method records the 1099 on tax return for the SSN on the 1099. Put the cost (column e) equal to the proceeds listed on the 1099 (column d) with zero capital gains (column H). A previous BH pointed out that you can not claim a lost for sale of property used for personal use, with a few exceptions (see instructions for schedule D).

That is unnecessarily complicated.

Enter the value from the 1099-k on Schedule 1 line 8z, and write "Form 1099-K Personal items sold at a loss".

Enter the same value with the same comment on line 24z.

Done.

And give eBay your SSN, not hers.