Ebiz Tax Tips - Tax Tips for eBay Sellers, Online Business and Other Small Business Owners » Inventory http://internetbiztaxtips.com Tax Tips for eBay Sellers, Online Business and Other Small Business Owners Sat, 12 Dec 2009 21:12:57 +0000 http://wordpress.org/?v=2.9.2 en hourly 1 How to value personal items sold on eBay for tax purposes http://internetbiztaxtips.com/2007/02/how-to-value-personal-items-sold-on-ebay-for-tax-purposes/ http://internetbiztaxtips.com/2007/02/how-to-value-personal-items-sold-on-ebay-for-tax-purposes/#comments Fri, 16 Feb 2007 13:03:56 +0000 kamckinley http://internetbiztaxtips.com/2007/02/how-to-value-personal-items-sold-on-ebay-for-tax-purposes/ When you sell items on eBay, you need to know the cost basis of the items you sold in order to determine your gain or loss on the sale for tax purposes.  This is pretty straight forward when you purchase items specifically to sell on eBay, but how do you value inventory that you bought for personal use, then later sold on eBay?

Let’s say you want to sell clothes you bought for your kids that they have outgrown, or toys that they no longer play with. Before you sell these items on eBay, you should research similar items to see what they have sold for on eBay or similar auctions.

For tax purposes, the value of your eBay inventory is the average selling price on the similar items you researched. Print out your research, and be sure to enter the average selling price on your inventory spreadsheet, for proof of your cost basis.

The most important thing is to keep good documents. If the IRS audits you and you can’t provide documents showing how much you paid for an item or what your cost basis is in the item, they may claim that your cost basis is $0, which means you will pay tax on 100% of the price you sold it for on eBay instead of just paying tax on the profit.

For more great eBay tax tips, please read our free special report, Tax Tips for eBay Sellers.

Tags: , ,

More Posts:

]]> http://internetbiztaxtips.com/2007/02/how-to-value-personal-items-sold-on-ebay-for-tax-purposes/feed/ 0