You ran a $28,000 estate sale, the estate expects $19,600, and your ledger shows $28,000 in revenue if you don't understand consignment. That extra $8,400 is not your profit — it is a sales tax liability, a payment to the estate, and a 1099 reporting question that will create an IRS notice if you get it wrong.
Consignment, Not Your Sale
Licensed auctioneers face the same consignor-settlement liability plus buyer's-premium revenue; auction house accounting shows the full Saturday-night journal entry.
An estate sale company sells as agent for the estate. The gross proceeds belong to the estate; your compensation is the commission and the fees defined in the contract — often 30–40% of gross, plus labor, advertising, and card fees.
Never book gross as revenue. The sale day is:
Dr Cash $28,000
Cr Consignment Liability — Estate $28,000 — gross held for the estate
Not Cr Revenue. The estate's inventory was never your inventory, and the estate's proceeds are not your revenue.
The Account-Sales Report Is the Revenue Event
After the sale, you produce an account-sales report that reconciles gross, fees, and net due to the estate.
For a $28,000 gross sale at 30% commission plus $1,200 in contracted charges:
- Gross: $28,000 (liability)
- Commission: $8,400 (your revenue, recognized only when the report is final)
- Contract charges: $1,200 (your revenue/fees)
- Sales tax collected: $1,900 (liability to the state)
- Card fees: $600 (reimbursable cost or fee, per contract)
- Net due to estate: $28,000 − $8,400 − $1,200 − $1,900 − $600 = $15,900
Book it:
Dr Consignment Liability $28,000
Cr Revenue — Commission $8,400
Cr Revenue — Service Fees $1,200
Cr Sales Tax Payable $1,900
Cr Consignment Liability (card fee payable) $600 — or Cr Cash if you already paid
Then Dr Consignment Liability $15,900 / Cr Cash $15,900 when you pay the estate.
1099 Reporting: Don't Report the Estate's Money as Yours
The same gross that creates an IRS matching problem is what determines the 1099.
- You are the payment settlement entity for card sales: The processor may report gross card payments on a 1099-K to you as the merchant of record. That gross matches your cash but not your revenue. Keep the gross-to-net reconciliation so a CP2000 that matches $28,000 to a $9,600 revenue return is answered with the liability trail.
- You may owe the estate a 1099-MISC or 1099-NEC: If you paid the estate $15,900+ and the estate is a person or non-corporate entity, the payment for the estate's goods is often reportable as gross proceeds (box 2 on 1099-MISC under old rules, now sometimes penalty-focused). The threshold and box depend on the year and entity type. Don't 1099 a corporate estate for goods where not required, and don't miss the filing for a non-corporate consignor where it is.
Check each estate's W-9 and entity type at intake, not at 1099 season.
Keep Your Finances Organized From Day One
Consignment is the purest example of cash that is not revenue. A ledger that shows gross as a liability until the account-sales report is the only ledger that matches the contract and the tax reporting.
Beancount.io keeps each estate sale as a liability account with a commission-and-fees settlement, all version-controlled and reconcilable to the 1099-K and the account-sales PDF. Get started for free and make the estate's money visible as the estate's, not yours.
