A. Gain or loss on the sale of a personal item is generally the difference between the amount you paid for the item (the purchase price) and the amount you receive when you sell it (the sales price).

For example, if you bought a refrigerator for $1,000 (the purchase price) and sold it for $600 (the sales price), you have a loss of $400. $600 sales price – $1,000 purchase price = ($400) loss amount.

On the other hand, if you bought concert tickets for $500 (the purchase price) and sold them for $900 (the sales price), you have a gain of $400. $900 sales price – $500 purchase price = $400 gain amount.

The gain on the sale of a personal item is taxable. You must report the transaction (gain on sale) on Form 8949, Sales and Other Dispositions of Capital AssetsPDF, and Form 1040, U.S. Individual Income Tax Return, Schedule D, Capital Gains and LossesPDF. See Publication 551, Basis of AssetsPDF, for guidance in determining your basis.

The gain on the sale of a personal item might be reported on a Form 1099-K.

The loss on the sale of a personal item is not deductible. For calendar year 2022 tax returns, if you receive a Form 1099-K, for the sale of a personal item that resulted in a loss, you should make offsetting entries on Form 1040, U.S. Individual Income Tax Return, Schedule 1, Additional Income and Adjustments to Income, as follows:

Report your proceeds (the Form 1099-K amount) on Part I – Line 8z – Other Income, using the description “Form 1099-K Personal Item Sold at a Loss.”

Report your costs, up to but not more than the proceeds amount (the Form 1099-K amount), on Part II – Line 24z – Other Adjustments, using the description “Form 1099-K Personal Item Sold at a Loss.”

In the example of the refrigerator sale above, if you received a Form 1099-K for $600 for the refrigerator for which you originally paid $1,000, you should report the loss transaction as follows:

Form 1040, Schedule 1, Part I – Line 8z, Other Income. List type and amount: “Form 1099-K Personal Item Sold at a Loss …. $600” to show the proceeds from the sale reported on the Form 1099-K

and,

Form 1040, Schedule 1, Part II – Line 24z, Other Adjustments. List type and amount: “Form 1099-K Personal Item Sold at a Loss…. $600” to show the amount of the purchase price that offsets the reported proceeds. Do not report the $1,000 you paid for the refrigerator because the loss on the sale of a personal item is not deductible.

You can use Form 8949 and Schedule D to report the sale of a personal item at a loss instead of Schedule 1 if you wish, for example, because you have other transactions that require you to file Form 8949 and Schedule D anyway. Because the loss isn’t deductible, enter an adjustment when reporting the proceeds and basis of the personal item on Form 8949 as follows. Enter “L” in column (f) as the code explaining the loss is nondeductible. Then enter the amount of the nondeductible loss as a positive number in column (g). In the example of the refrigerator sale above, enter $600 in column (d) for the proceeds, $1,000 in column (e) for the cost or other basis, “L” in column (f), and $400 in column (g) as the amount of the adjustment. This will result in $0 as the gain or loss in column (h).