Paypal Changes for 2022

Let’s talk about non-audio. You downsize and sell you home. Now it’s time to sell all the extra stuff you have. Some of it is really great furniture, rugs etc…We did this recently.

Your lucky to get 10-15 cents on the dollar, but you end up selling some $2500-$5000 worth of stuff. You use Venmo and a 1099K form is issued. Now you have to go back as much as 10 or more years to determine what you paid for this stuff. If you can’t find the receipts, then I suppose you just pay the tax if you no longer have “precise” records. Again, don’t want the hassle.

The $600 hurdle is far to low in my humble option. Make it closer to $2500-$5000.

@8th-note : very informative! Question: what schedule would you file this under?

Also, I believe for hobby transactions, losses are disregarded, but gains are recognized. They cannot be offset with each other. I may be wrong

 Correct on gains and losses.

This wont be much different than what we now do when we donate goods to a certified charity. You can guesstimate with some backup, receipts are best but guesstimates with backup work and passed the smell test with a recent audit. It also depends a great deal on materiality of the aggregate tax return...$50,000 on a paypal 1099 on a return showing $1million of AGI isn’t a thing. $50,000 on a $50,000 AGI is a side business unless its a one off year.

By the way, everyone is aware that this isn't a new thing, its just that some of the vendors like Paypal must report the transactions. Technically, you must be able to determine basis for every transaction to determine if there was income or not.

Makes sense Ghasley. Very rarely do we make money on an audio sale or selling our used furniture. Keeping records of all these purchases going back 3,5,10 or 15 years is another matter.