eBay 1099-K – How to enter 8949 Adjustments to Gain?
I entered my eBay 1099-K as follows.
Income -> Your Investment and Savings Accounts -> Add Another Investment -> Personal Items (1099-K) -> Summary ->
Selected “Long Term” . Entered 1a (Gross amount) in Sales Proceeds. Entered Cost Basis (sum).
Save and Continue -> Continue ->
Then I attached my 8949 additional statement for the eBay 1099-K, which has significant adjustments to gain to account for fees, refunds, and shipping.
This is apparently not the correct route to take as I was never provided an opportunity to enter the adjustments anywhere in FreeTaxUSA, so the software can move the sum of all my individual eBay transaction adjustments to the 8949 Part II column (g) cell for the eBay 1099-K entry.
How do I enter the eBay 1099-K in a manner that allows for the adjustments to be reflected on Form 8949, and therefore on Schedule D in column (g) adjustments? As of now, my Net Long-Term capital gain on Schedule D is incorrect (too high) because the gain adjustment for all my eBay transactions is not entered.
Thank you.
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I will answer my own question. Do not enter as if it is a 1099-K. Enter it as if it is a 1099-B, following the prompts for a stock or mutual fund sale. Then, while still summarizing, you can enter the summed cost basis and summed adjustment to gain. The gain adjustment is achieved by indicating there are sale (stock) fees or expenses. Enter the gain adjustment. Upload the pdf statement with all the individual transactions when prompted. Once complete, you can preview Schedule D and Form 8949. My review of the preview showed Form 8949 and Schedule D were correct, with the appropriate Proceeds; Cost basis; Adjustment codes “EM”; and Amount of adjustment for the eBay 1099 entry on 8949. The information was properly carried from the 8949 to Schedule D.
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Hi Hit_4_show,
Was this for the sale of personal items at a gain? I never really understood the context of why enter the income reported on a 1099-K as an investment sale.
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Gain: yes, at least as best as I can document item basis. Lots of personal items, acquired over decades from various sources at widely varying costs relative to FMV at time of original acquisition. No documentation, **** history, etc to substantiate basis for most items. So, set basis to $0 on most.
The IRS provides quite specific advice/instructions, through its website, on how to handle 1099-K’s generated from online payment platform transactions, though it took me a long time to find all the relevant information and understand it.
I entered as an “investment gain”, specifically stock/mutual fund sale route, in the context of FreeTaxUSA, to simply get the correct numbers to the correct cells on specific IRS tax forms, as required by the previous IRS advice/instructions. Specifically, Form 8949 and Schedule D. I do not know of there are other routes to take during the FreeTaxUSA “interview” to get the correct numbers to Form8949 and Schedule D. I hated claiming any capital gains on personal item sales, but that appeared to be the safest option given my specific circumstances. This is especially so as I am confident there was actually a loss on many of the items; albeit with no proof.
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Hello hit_4_show:
From your post it appears you have already entered your sales of personal items for which you received a 1099-K, and may have already filed your tax return. Therefore, we will just add a few comments for your consideration should you need to re-visit these sales and make any changes.
Your approach of reporting the sales in our Investments and Sales section was the correct one to some extent. Anytime a taxpayer sells something that is a capital asset, and the capital asset was sold at a gain, that gain needs to be reported on the same form(s) where taxpayers report the sale of securities, such as stocks, bonds, mutual funds, etc. A capital asset can be anything of value, and personal property such as your personal items qualify as a capital asset.
Going forward, the preferred method to report the sale of personal items sold at a gain in which the taxpayer receives a 1099-K is to select the option for Personal Items (1099-K), rather than selecting the option for Stock Sales 1099-B, or any of the other options in the Investments and Savings section. When entering the sale of personal items sold at a gain, any fees, delivery charges, or other costs associated with the sale can be added to the cost basis. After all of the cost and sales proceeds information has been entered, the personal property item(s) sold at a gain will appear on Form 8949 as well as Schedule D.
Reporting the sale of personal property items as a stock sale appears to have generated the adjustments codes EM that are appropriate in connection with the sale of securities and are not relevant with regard to the sale of personal property items sold at gain.
A loss from the sale of personal property is treated differently under the tax code. Such losses are not deductible but nonetheless are reported on Schedule 1 and appear at the top of that form as more of an information item for the IRS because the IRS needs to be able to connect the loss with the amount reported on a 1099-K.
Personal property items sold at a loss where the taxpayer has received a 1099-K, are reported in the 1099-K section and on the appropriate screen, select Yes when asked was the property sold at a loss. The loss will appear on Schedule I at the top of that form and will not impact at all the tax return.
Also, if you need further assistance you can contact our Customer Support Team. To do so, select the Support tab in the upper right corner of your screen, and in the drop down select Support Center. Any tax information you provide our Customer Support Team will remain secure.
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GeorgeM,
Thank you.
Seeking clarification and/or confirmation.
You are suggesting adjusting the basis directly as opposed to adjusting the gain/loss? It seems an 8949-style summary statement will still be requested for the ebay 1099k when completing a return through FreeTaxUSA. Let us assume the summary statement mirrors Form 8949, as that is what I did for the summary statement. I simply cut and pasted from the IRS form into a spreadsheet. My summary statement has the exact same column labels as an IRS form 8949. Sum any eBay fees, shipping cost, return cost, refund, etc for a specific transaction. Add those fees to basis to create an adjusted basis. In my case, for “safety”, I set basis to $0 for almost all transactions. Enter the adjusted basis in column (e) Cost or other basis…. for that transaction. For that transaction, leave both columns (f) Code(s) from instructions and (g) Amount of adjustment blank. Columns (f) and (g) are for reporting gain/loss adjustments for a transaction: both type of adjustment (f) and amount (g). The sum of all cells for column (e) Cost or other basis…. on this summary statement will be the cost basis entered into FreeTaxUSA when prompted for cost basis for the eBay 1099k. Is this all correct? If so, can you direct to IRS documentation that specifically states to adjust the basis as opposed to the gain/loss?
It appears following your method and the method I used both yield the same amount on Schedule D Line 15, although I accept IRS might reject one method in an audit. Though I do not intend to amend the 2024 federal return, I will adjust my 2025 record keeping if it appears I completed improperly the 2024 eBay 1099k summary statement incorrectly, and therefore Form 8949 and Schedule D. I want to generate my 2025 eBay 8949 summary statement throughout the year as transactions occur, so it is already complete at end of TY 2025. If I accept that your proposed method is consistent with IRS instructions, I will follow that method for TY2025.
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