I have had this discussion with my accountant when I was trying to clarify if my bookkeeping was correct. I purchased a lot of a few thousand cards for $1000. I select many of the good cards out of the lot and sell them via ebay paying seller fees and shipping fees. The proceeds from each of these transactions I use to buy down the purchase price of the lot until I have recouped all $1000 I had spent (I'm literally determining cost basis of whatever I want but in this case it was the total value received). Once the lot was payed for then the remainder of my items I owned at a $0 cost basis and then taxes were paid on the proceeds from those cards as those sales were all profit. He said I can determine my cost basis any way I want as long as it's consistent and that I am keeping documentation.
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