They're going to issue a 1099k or equivalent. It's the same form merchant services providers (credit card processing companies) issue to business owners that accept cc as payment.
The 1099k reports gross receipts. The recipient enters any expenses they're taking against that income on their tax return. If you sold for $1000 and paid $1500, you have gross profit of $-500. Nothing to worry about tax-wise. Just make sure you report the $1500 as cost of goods sold. This is assuming you're treating the sale as income derived from a business.
I want to know how we're supposed to separate out ordinary income, long/short term cap gains and collectibles, since they have different tax rates. Ordinary income and short term gain tax rates vary depending on your income tax bracket, long term cap gains are taxed at 0%, 15% or 20% and collectibles at 28%. Then there's the net investment tax that comes into play on investment income, but not other ordinary income.
There's no legitimate reason why taxation in the US should be as complicated as it is. It's all smoke and mirrors to keep the layman from understanding just how much tax he's paying to the government.
