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
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.