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1099K from Stubhub for Selling Tickets


ETax847

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Caught my eye.  Assuming no more delays, I will soon be getting paid for selling tickets for a certain performer who is a year late in completing their residency in LV.  IIRC, it has always been taxable income (if a profit is made).  The lower 1099 threshold will make it profitable to the IRS since many/most? individual's sales were unlikely to have been reported.

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Watch/ask for any additional costs, such as bank or charge card fees between time of purchase and time of payment.  Make sure the 1099 is accurate, and shows the amount actually paid out.  IOW, watch for the broker fees.  Candidly I bought as many tix as I could for a certain performer's LV shows.  Sold all but 2 right away, at a multiple profit (which more than paid for our personal tix, flights, and hotel), but lower than what most were asking.  Those we held for personal use, we let go right after the "cancellation/postponement".  The entire process turned us off so much, I did not try the same for another recent performer whose online sales process failed, even though it absolutely would have been profitable, and we have a few family members who would have wanted to go...

Team tix may be slightly different as many/most will have a controlled resale portal which may have been used.

 

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If you have a gain, I'd report it on the Schedule D but I think if it's not a gain you still need to report is on the tax return. That's what I listed above. For example if you are selling junk on Ebay or Facebook to clean out your basement, you'll receive a 1099-k that isn't for a profit.

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I don't get the advice to not report anything on the tax return if selling whatever at a loss when a 1099K is received.  I suspect IRS computers will be busy matching those forms with tax returns and spitting out notices if matching amounts aren't found.  If you paid $2000 for your couch and sold it for $1k, PayPal will send your a 1099K.  I'd put it on the 8949 and code it as personal so the loss won't compute.

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That method doesn't work very well, @Sara EA, if what you have is someone selling little bits here and there on eBay and otherwise has no need for a Schedule D. Over a year it adds up, but also it doesn't even add up to a hobby let alone a business. Since I charge by form, adding in a Sch D/8949 charge when I could put it on the "other income" line and back off all but a buck (and that just to make the detail transmit, which it does not when it zeros out completely) is not fair to the customer and does not properly present the situation.

I should think that reporting on a 8949/Sch D also opens the client up to IRS queries about why a 1099-K item was not then reported on a 1099-B instead. 

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30 minutes ago, Catherine said:

That method doesn't work very well, @Sara EA, if what you have is someone selling little bits here and there on eBay and otherwise has no need for a Schedule D. Over a year it adds up, but also it doesn't even add up to a hobby let alone a business. Since I charge by form, adding in a Sch D/8949 charge when I could put it on the "other income" line and back off all but a buck (and that just to make the detail transmit, which it does not when it zeros out completely) is not fair to the customer and does not properly present the situation.

I should think that reporting on a 8949/Sch D also opens the client up to IRS queries about why a 1099-K item was not then reported on a 1099-B instead. 

I think the "proper" way to do it is the Schedule D/8949 route.   The D is not only for sales recorded on a 1099B.   Think of a home sale?   Your method may work Catherine because the amount is not enough for the IRS to inquire about, but I think Sara EA has the "IRS" way outlined correctly.

Tom
Longview, TX

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If you buy something and then sell it at a profit, that's a short term capital gain. It's going to be taxed as ordinary income so it doesn't really matter if you put it on "other income" or list as a short term capital gain. I think your record keeping should be the same to prove your profit. If you buy a rehab property, rehab it and sell it the common reporting is a capital gain. That doesn't mean it shows up on a 1099b.

 

Be sure and include the EIN with the capital gain so the IRS can link the 1099-k.

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Catherine, what will you enter on the line where you back out the cost of the item(s) to net $1 profit?  Occasional gamblers with net losses who don't itemize can't just "back out" the money spent on their bets.  Similarly, hobby income must be reported but expenses (including COGS) are no longer deductible.  Infrequent sellers who market their treasures online (where they are most likely to be paid through a system that issues 1099ks), are selling an asset for which they have basis--typical Sch D stuff.  You seem to want to protect your clients from your fees since you charge by the form.  If your client has a Sch D activity, why are you reluctant to charge?  Do the D and 8949 at no charge then.  Better that than have an IRS notice to deal with a couple of years down the road.  MC Breck has a great idea about entering the EIN so it's easier to prove that the 1099k amount was indeed reported on the return.

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22 hours ago, Sara EA said:

are selling an asset for which they have basis--typical Sch D stuff

I think you are misunderstanding me. This method obviously does not apply to gamblers, or hobbyists, or an asset sale not reported on a 1099-B.

Think of the person cleaning out their closet after quitting a corporate job. Never going to wear the "sensible pumps" to an office again, or the fancy suit either. Sells them on eBay, over the course of a year, one at a time as she gets around to it. None of the items are recent enough that she recalls where she bought them or what she paid for them, except to know she's selling for way less than they were purchased for. Gets a 1099-K for $610. None of that belongs on Sch D - they're extraneous possessions, not assets.  Basis? Not recoverable. the only reason to report is to avoid any chance of an IRS nastygram two years from now when no one remembers anything about the transactions. I think that in such cases reporting  on one line "1099-K from eBay, $610" and on the next line "personal items sold at a loss, -$609" represents what really happened, in a way that does not ask for a CP2000 letter, and without affecting taxes or adding forms and complications that just really don't belong and do not in any way affect the correct tax liability of the taxpayer. 

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If I recall correctly, my method of reporting 1099-K transactions that do not affect taxes and are solely to prevent CP2000 letters (or state equivalents), came as a suggestion from either an IRS or state tax agency employee, when 1099-Ks were new.  Their interest is "is there taxable income here?" only.  If the answer is no, they don't want to be bothered with someone selling off their personal used work shoe collection.

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On 12/21/2022 at 2:12 PM, Medlin Software, Dennis said:

I think I saw a headline where there is talk of an amendment to raise the reporting limit to 10k, IIRC, it was to be stuffed into the budget bill.

News reports are saying this amendment did not get in the final bill.

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18 minutes ago, cbslee said:

News reports are saying this amendment did not get in the final bill.

Proof again of guaranteed lifetime employment in any accounting or tax field for anyone so inclined.  Similar to the wayfair ruling, as it is a game changer.

I read it as budgeting law.  A way to show something is getting paid for.  Like how the final Q of ERC was clawed back, after the fact, to pay for other grants, some of which were to private firms.

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Issue Number:    IR-2022-226

Inside This Issue

Note: This is updated to include the correct notice.

IRS announces delay for implementation of $600 reporting threshold for third-party payment platforms’ Forms 1099-K

WASHINGTON — The Internal Revenue Service today announced a delay in reporting thresholds for third-party settlement organizations set to take effect for the upcoming tax filing season.

As a result of this delay, third-party settlement organizations will not be required to report tax year 2022 transactions on a Form 1099-K to the IRS or the payee for the lower, $600 threshold amount enacted as part of the American Rescue Plan of 2021.

As part of this, the IRS released guidance today outlining that calendar year 2022 will be a transition period for implementation of the lowered threshold reporting for third-party settlement organizations (TPSOs) including Venmo, PayPal and CashApp that would have generated Form 1099-Ks for taxpayers.

“The IRS and Treasury heard a number of concerns regarding the timeline of implementation of these changes under the American Rescue Plan,” said Acting IRS Commissioner Doug O’Donnell. “To help smooth the transition and ensure clarity for taxpayers, tax professionals and industry, the IRS will delay implementation of the 1099-K changes. The additional time will help reduce confusion during the upcoming 2023 tax filing season and provide more time for taxpayers to prepare and understand the new reporting requirements.”

The American Rescue Plan of 2021 changed the reporting threshold for TPSOs. The new threshold for business transactions is $600 per year; changed from the previous threshold of more than 200 transactions per year, exceeding an aggregate amount of $20,000. The law is not intended to track personal transactions such as sharing the cost of a car ride or meal, birthday or holiday gifts, or paying a family member or another for a household bill.

Under the law, beginning Jan. 1, 2023, a TPSO is required to report third-party network transactions paid in 2022 with any participating payee that exceed a minimum threshold of $600 in aggregate payments, regardless of the number of transactions. TPSOs report these transactions by providing individual payee’s an IRS Form 1099K, Payment Card and Third-Party Network Transactions.

The transition period described in Notice 2023-10, delays the reporting of transactions in excess of $600 to transactions that occur after calendar year 2022. The transition period is intended to facilitate an orderly transition for TPSO tax compliance, as well as individual payee compliance with income tax reporting. A participating payee, in the case of a third-party network transaction, is any person who accepts payment from a third-party settlement organization for a business transaction.

The change under the law is hugely important because tax compliance is higher when amounts are subject to information reporting, like the Form 1099-K. However, the IRS noted it must be managed carefully to help ensure that 1099-Ks are only issued to taxpayers who should receive them. In addition, it’s important that taxpayers understand what to do as a result of this reporting, and tax preparers and software providers have the information they need to assist taxpayers.

Additional details on the delay will be available in the near future along with additional information to help taxpayers and the industry. For taxpayers who may have already received a 1099-K as a result of the statutory changes, the IRS is working rapidly to provide instructions and clarity so that taxpayers understand what to do.

The IRS also noted that the existing 1099-K reporting threshold of $20,000 in payments from over 200 transactions will remain in effect.

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The delay means we have time to educate our clients on the required record keeping.  Dates of purchase and sale, original and sales prices, etc.  We may stick a brief paragraph in our client letter.  The purpose of this provision was to narrow the tax gap--a laudable goal.  The law was passed months ago so I don't understand why it's suddenly too confusing to implement on time.  The IRS is usually pretty good about publicizing changes, but I did not see much info released on the 1099K.  Congress did not change the law, so IRS used its own authority to delay implementation.  Maybe because they're now in the hot seat for failing to audit a certain person's returns that they were required to audit?  Now they've given people who make plenty of money selling used goods they bought at yard sales and flea markets time to switch from accepting electronic payments to cash only.

Edited by jklcpa
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The IRS now explicitly agrees that personal gains are reported on Form 8949 and personal losses from Form 1099-K are reported and backed out on Schedule 1. See https://www.irs.gov/businesses/understanding-your-form-1099-k (the section on personal income).  The same applies to an incorrect Form 1099-K.

The Form 1040 instructions have also been updated.  See the instructions for Schedule 1, lines 8z and 24z.  Briefly:

Quote

If you received a Form 1099-K for a personal item that you sold at a gain, don’t report this amount on line 8z, instead report it as you would report any other capital gain on Form 8949 and Schedule D.

If you sold a personal item at a loss, enter the amount of the sale proceeds from Form 1099-K on line 8z. In the entry space next to line 8z write “Form 1099-K Personal Item Sold at a Loss” and also enter the amount of the sale proceeds.

If you sold a personal item at a loss, enter the amount of the sale proceeds from Form 1099-K on line 24z that you reported on line 8z.  In the entry space next to line 24z write “Form 1099-K Personal Item Sold at a Loss” and also enter the amount of the sale proceeds.

 

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  • 3 weeks later...

Succinct, sensible, and direct information from the IRS!

We did well on ridding a certain performer's LV concert tix, after deciding not to wait the year for the reschedule.  I am fine with paying the tax, and appreciate clear direction.  Will be interesting to see 2023's direction, as we will get one more payment in a few weeks, and likely a 1099-K.

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  • 1 year later...

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