Ebay Selling

June --

I am a self-employed call center agent and work out of my home on my computer where I get 97% of my income.

In between calls, while waiting for the phone to ring, I sell items on Ebay. I am at a total loss on how to treat my ebay income, and what to do about expenses. I dont know how to treat the ebay income on my taxes, or how to allocate the expenses. Some of the items are items I purchased to sell on ebay, and some of them are things I have had laying around the house and am selling just to get rid of.

Donna
Spearfish, SD



Hello Donna,

If you are selling items on Ebay just to pass the time while waiting for the phone to ring then you're engaged in a hobby.

If you are selling on Ebay to make money, then you're engaged in a self-employed business. Your income is self-employed income. All the things I've said on this blog about deducting expenses apply to you.

To figure your "cost" on an item depends on how you came in possession of the item.

** If you bought it solely to sell, then your cost basis is what you paid, including shipping.

** If you bought the item and used it for personal use then your cost is the lower of what you paid or what you can sell it for. What you can sell it for is called "fair-market-value."
**** If you paid $30 for a book and sell it for $20, then its cost basis is $20. That's called its fair-market-value. You have no gain or loss on that sale.
**** If you paid $30 for a book that is now out of print and so you sell it for $50 its cost to you is $30.You have a profit of $20 on that book.

Remember you must split the cost of your computer and ISP based on usage for the two businesses -- 97% to 3% ??

Hobby vs Business is explained in my book Self-employed Tax Solutions .

Best,
June