PayPal's press release covers this specifically. Quick answer is that unless you're making a profit on your resale it won't, but talk to your accountant.

so say you do make a profit, but were planning to report profit prior to this form. So you get the form.... will be double taxed now?

Only accept cash.

That's really an accountant question, but since PayPal, etc isn't doing any withholding, I would presume that you wouldn't report the income separately from this 1099-K. You'd need to account for the cost of goods somewhere when calculating the profit component, which if you're really doing enough of to be of interest to the IRS it seems like you're probably running some form of business vs selling off some old gear here and there.

Even if they did start needed to do withholding (which doesn't seem like it's being discussed) you shouldn't get double taxed - your return would true up (payment or refund) to what you really owed.

truth is not tri related, i rent to a tenant who pays via these services, which i report to IRS, but i guess you are right since tax will be on overall income

It’s not an accounting question. It’s a tax attorney question.

I don’t think we will see much of a change. There’s only a tax if you are making a profit. Majority of used stuff being sold is being sold at a loss. Now if you sell a bike for $6k but you bought it for $10k, are you going to have to prove you bought it for more than $6k? What if you lost the receipt if you bought it new or bought it second hand and have no receipt?

You may see more sellers pushing for paying “friends/family or gift”. But they way I see it, the new law has minimal effect on the majority of us buying/selling stuff second hand.

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IANAL, but I did use turbotax at a holiday inn once.

Probably not if you have documentation for what you paid for the wheels & shipping. Probably not even if you have documentation of other offsetting bicycle expenses. But you might have to organize it as a business in order to claim the expenses on a schedule C rather than have them compete against the standard deduction.


Fun fact: You cannot claim the IRS standard mileage rate on a bicycle (which was much to my chagrin as a paperboy)

Not an accountant or a tax lawyer. But I did own vacation rental property for 25 years that was managed by a real estate firm. I got a 1099 every year, which they also sent to the IRS. It was my job to identify all the costs so that I didn't owe tax. In my pea (pee?) brain, you'll have to do the same thing for the 1099-k.

I'll buy your wheelset. I'll mail you the cash when it arrives. Deal?

As a CPA that only does tax, this thread is painful to read. Just read the form instructions people. These things are explained. People selling old parts should not be paying tax. People running a side biz and not paying tax, who should have been, are now more likely to. Frankly this is long overdue.

I have had 3 people tell me "I dont want this reported to the IRS so I will only do F&F or local cash" When I said well you won't have to pay tax on it, I got the "I don't want the IRS in my paypal"
I think more than an actual impact on people, there is a big brother effect on people

Andrew, thanks for sharing! I hadn't seen this yet.

As a tax CPA, do you know what the level of proof required is to show something was sold at a loss?

If I bought wheels my wheels for $1200 in cash locally but then sell online for $1000 do I need to prove this to the IRS or will they trust me? Do I need to start doing signed receipts for everything and saving for 5 years?

the better your records, the better off you are, for all things tax related. This is just my opinion, but the standard for records should be substantially less for occasional sales of personal use items then for a business. The presumption should be a loss for personal use items. I wouldn't necessarily worry about a signed receipt, but say, keep the ATM withdrawal form and note 'used wheel purchase' on them. Or keep the emails with a craigslist seller where you agreed on the price. Where it gets problematic is when you have frequent sales, because then is starts to look like a business, and is more likely to be profitable. This is designed to catch the people running a side business parting out bikes, or people getting sponsor discounts, and then selling at a gain at year end, and those are taxable gains that were frequently not being reported. This advice is of course worth what you paid for it.