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.
