eBay Seller’s Tax Woes
A seller of coins on eBay successfully substantiated some, but not all, of his cost of goods sold and expenses, but still owed taxes. His 1099-K from PayPal reported payments of over $37,000 in 399 separate transactions. He was entitled to deduct eBay and PayPal fees as well as Internet charges, postage, and packing costs. But because he couldn’t substantiate part of the cost of goods sold, he owed taxes, and a 20% accuracy-related penalty.