But the IRS is taxing you on the proceeds, but in reality the proceeds that are taxed should be capital gains, as you purchased the item and paid taxes, so the capital gains on the sale. The difference in purchase and sale is what the taxes should be. What if you held the item longer than a year?????Yep. And you forgot to mention that then the government will nail you on the proceeds of your sale, once you break $600 for the year. All these are reasons why I stopped selling on eBay