THE IRS HAS TAKEN MY TRANSACTIONS VIA PAYPAL AND IDENTIFIED THEM AS TAXABLE INCOME

This article sheds more light on what will happen starting in tax year 2022:

https://www.cnbc.com/2021/03/26/its-going-to-get-harder-to-avoid-telling-the-irs-about-income-from-o...

Wednesday morning I was at the IRS Office in Providence RI, the gentleman there informd me that I need to fill out a "Schedule C" which is a business's identification of costs associated with a sale.

Will post how this all goes 

You should probably look at it differently.  You will have to deal with them so I would learn to play their game.  Yes, you made income but I highly doubt you made profit.  You should take the deductions on the equipment you originally bought (higher dollar amount) and that should offset the sales proceeds from paypal.  

IRS is watching this thread.

@eag618 
Glad to see that you are on a path to getting problem resolved.

While I don't agree with all of PayPal's policies, on this issue with taxes, they are only doing what is required by lay for them to do.

Either of two ways to handle, depending on which most applies and works best for you: 

1) Show, with records of past purchases and sales and intent of sale, that you are only doing as a no profit hobby or are simply reducing or replacing some of your collection of audio gear.

2) If you are consistently making a bit of profit on sales and equipment turn over, consider yourself a small business and take advantage of itemizing cost of goods and operating expenses, that will help reduce or offset apparent profits.

Best of luck either way.........Jim