Quoted from ToddSonOfOdin:Can someone ELI5 this? Say PayPal reports $10k of payments to the IRS. How do we account for cost of goods sold?
Same as it's always been. Receipts, cancelled checks, electronic records, handwritten notes, photos, a narrative from memory.
Individual transactions will likely get as much scrutiny as a donation to goodwill. Likely none and a plausible narrative backed by a the equivalent of a blurry receipt that says "clothes. 25 bags" enough to cover anyone generally operating in good faith.