I have my own reselling business. I only use eBay for selling. If I have an item that I sold and don't have a proof-of-purchase receipt, then how do I report my profit on that item? Do I have to say I bought the item for $0, or can I use an approximate price that I paid? If I were to get audited, how can I prove what I paid?
Determining cost of items sold on eBay can be hard, because it is hard to say when, where, and how long you have had the item.
If you don’t know how much you originally paid for the item, then you should either use $0 as its cost or create a receipt with an estimated purchase date and cost of the item, if you can reasonably determine this information.
For more resources, check out PICPA’s Money & Life Tips, Ask a CPA, or CPA Locator.
Answered by: James A. Gante, CPA, is a principal in the entrepreneurial services group of Stambaugh Ness PC in York, Pa.