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Let's say I sold a drone that I paid $10,000 for a year ago for $5,000 on eBay and that the buyer pays via a credit card. Starting in 2022 you're supposed to get a Form 1099-K whenever you make credit card sales > $600.

Since I sold it for a loss I shouldn't have to pay taxes but the IRS isn't gonna know if I sold it for a profit or loss from the 1099-K. I guess I could report it as a loss on a Schedule C but if I do that then after three years I'll be classified as a hobby vs a business and I won't be able to declare losses anymore. I also actually do do some consulting on the side and have to file a Schedule C for that and I wouldn't want my selling stuff on eBay for a loss to adversely impact my consulting business.

And what if I sell something for someone else? Like let's say the drone I sold for $5k wasn't mine but my friends and I was just selling it for them to help them out. If I'm not seeing any of the profits why should I have to pay the taxes?

Previously, this wasn't an issue for me as I'd just not report it as income if I didn't think it was appropriate. I never sold more than $20k worth of stuff in a year so it wasn't a huge issue. I wouldn't report it, the IRS wouldn't know and it just wasn't an issue. Starting in 2022, however, things will be different.

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You sold personal property, you don’t have to do anything with this form. PayPal, or whoever, is now obligated to send you a 1099-k which is independent of whether you have an obligation to claim any or all of that reported amount as income for tax purposes. And there’s no rule obligating you to reconcile that amount on your taxes.

Unless your consulting business is related to drones this $5,000 payment is not income regardless of whether or not you receive a 1099-k.

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