THE IRS HAS TAKEN MY TRANSACTIONS VIA PAYPAL AND IDENTIFIED THEM AS TAXABLE INCOME

Hey guys politics aside, this is a new thing in the past year where several STATES (not the IRS) passed laws greatly reducing the threshold for reportable 1099 income. The intent was to “legitimize” much of the gig economy that is paid off the books and was unable to qualify for COVID-related benefits etc.

But the side effect is that average hobbyists who buy and sell gear (audio or otherwise) are now getting pinched by PayPal who are just following the new state laws. And once they follow the State laws and send out the 1099s, then the IRS gets copies as well and this is what happens next.

A lot of folks who bought gear and sold it at a loss to finance new gear are ending up with reportable income from PayPal. For example in Virginia, the federal thresholds remain the 200 transactions or $20,000. But VT, MA, VA and MD lowered that threshold to $600. IL lowered it to $1,000.

https://www.paypal.com/us/smarthelp/article/FAQ3895

This article sheds more light on what will happen starting in tax year 2022:

https://www.cnbc.com/2021/03/26/its-going-to-get-harder-to-avoid-telling-the-irs-about-income-from-o...

Wednesday morning I was at the IRS Office in Providence RI, the gentleman there informd me that I need to fill out a "Schedule C" which is a business's identification of costs associated with a sale.

Will post how this all goes 

You should probably look at it differently.  You will have to deal with them so I would learn to play their game.  Yes, you made income but I highly doubt you made profit.  You should take the deductions on the equipment you originally bought (higher dollar amount) and that should offset the sales proceeds from paypal.  

IRS is watching this thread.