You guys must not be used to figuring cost basis for capital gains/losses. Shipping is included in basis. Do it any other way and you're not taking enough of a loss or paying taxes on more gains than you should. And if you're not declaring these transactions at all...well that's sorta illegal

Sale price is immaterial. Cost is material. Even mileage is deductible as part of cost basis (and should be included in cost). As mentioned earlier, any other math is self-delusion, aka "for the wife" math. The way some people move machines in and out around here, you'd think they'd want to take the loss deductions, especially if their top bracket is as high as it appears

Federal return. Unless NH ceded the Union during my last nap?

Yes that's a position one can take. Just make sure you don't tell any out of work friends or neighbors.

"Whistleblower - Informant Award

The IRS Whistleblower Office pays money to people who blow the whistle on persons who fail to pay the tax that they owe. If the IRS uses information provided by the whistleblower, it can award the whistleblower up to 30 percent of the additional tax, penalty and other amounts it collects."
http://www.irs.gov/uac/Whistleblower-Informant-Award

And of course it would be foolish to only file the losses