got my PayPal 1099 /// what now?

Something that hasn’t been said here that might help clarify it for some:

You are not a business. the tax law was not meant for you. It was designed for those who make their living by reselling on ebay. Have a garage sale and resellers will show up trying to buy anything they can resell for pennies. they will be moving fast and have a truck already half full of junk.

But in typical government fashion, they decided to go ahead and tax you if you made a profit, even it it was just luck.

As an aside, I’m not sure what happens if you sell 10 items in 2024. You sold 9 at a loss of a total of $10,000. But you sold one at a profit of $1000. You had a net loss of $9000. I hope they don’t tax you on the $1000 profit.  Those of us used fo filling out schedule D for capital gains know that this isn't how it works, we even harvest losses in December to offset gains.  But since they aren't letting you use losses to offset income, they may not let you use losses to offset gains made through other sales.

Jerry

Not sure if this has been made clear, or not. The IRS $5000 threshold is the amount at which Third Party Settlement Organizations (TPSO) like eBay, etc. need to provide a 1099 in 2025. It's not an amount below which the seller can ignore sales. The IRS still wants taxes paid on any profits, but a TPSO isn't required to provide a 1099 for sales below $5000.

they decided to go ahead and tax you if you made a profit, even it it was just luck.

The government has no way to know if a PayPal user is a business or not. If they did not do it like this, then every business would just say they are not a business, just a hobby, and pay no taxes. As others have said, simply state you sold at a loss and move on.

But since they aren’t letting you use losses to offset income, they may not let you use losses to offset gains made through other sales.

The gain or loss is not for a single item, it is the total for the year. It is that way for a business, it is that way for capital gains, it is that way for buying and selling anything whether you are a business or not, it is that way for this.

The difference between a hobby and a business is, if you lose money on a hobby, you can’t use that loss to offset other income.

Does bitcoin send out 1099?

First and foremost book the income. The IRS computer audits ALL 1040s.  If they show a 1099 and you don’t the examination escalated!

You do not need to provide reciepts unless you are audited. At that point, abscent proof of payment (your basis) you may be required to demonstrate with “reasonable satisfaction” the MSRP prices on your gear in the year offered for sale.  The IRS will then “impute basis” and do the profit/loss calculation from there.

It is my strong conviction that you should have a CPA prepared and CPA signed return.  This greatly reduces your risks.  Remember these are goverment employees- they take the path of least resistance and a CPA in this case IS resistance.