Paying Tax on eBay Profits

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  1. How does it work? When you are buying and reselling? Not when you are selling used items. Thank you for any info, or point me to somewhere I can learn about the ins and outs of it.
     
  2. From what I've read, I know that Paypal and other credit card purchase facilitators will start reporting payments to the IRS in 2011 that are more than $20,000 in a year. (This is according to the IRS website). Ebay currently doesn't report to the IRS. The primary issue is, are you making a profit? Only the net profit is taxable. But good record keeping is important. If you can't prove what you paid for an item, the IRS will give it a value of $0 so anything you sell it for is profit.