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I've never worked with an on-line auction, but it is conceivable that the auction service company would report the proceeds of the sales on a 1099. If they do this (and I'm by no means certain that they do), it's an almost guaranteed letter from our friendly tax folks saying they can't find where the 1099 is reported on the return. Included will be a bill (generally of jaw-dropping proportions) for their idea of the taxes, interest, and penalties due. Your friend's could be exceptionally large, since this is probably self-employment and would include SE tax on top of the income tax.
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