Question about sales income vs. family/friends income and the 20k reporting requirement?

[Linz12345]

Hi,

My boyfriend's Paypal account was used this past year for some business transactions, not exceeding 20k.  He did also however receive money sent to him via friends/family.  One would expect on the financial report from Paypal to see that the overall sales revenue is below 20k, since 20k is only exceeded when you add in the money sent to him by friends and family.  However, when looking at the financial report for year to date as of today, it would appear as though Paypal is lumping all incoming money together and calling it sales revenue.  Because he did have over 200 transactions, this is going to result in all of the income being reported to the IRS, is it not?  Has anyone ever had this happen before, where money that wasn't business related is reported as sales on the financial report?  How do we sort it out come tax time?  Do you think this could have happened because it's a business account, so Paypal just assumes all incoming money is sales revenue?!  

[DPCreations]

I think you will have difficult time to explain it to the IRS; it's probably best to talk to a business tax accountant.

I think what the IRS willl look at for compairison is the revenue on your Schedule C.  As long as your total Schedule C revenue is higher than that reported by PayPal I think you should be fine.  

I think IRS will look for discrepancies between you income reported and the 1099K, but best talk to a busienss tax advisor.