EBay, Collectors, Flea Market & Antiques

The point is that let's say it was a bicycle I bought secondhand in 1997 that I sold last week for $500. I will receive a 1099 saying I had $500 in misc. income. The IRS has no idea what I paid for it, and even IF I remember it was $495, which is unlikely, I have zero proof if I paid $100, $1000 or anything in between.

I have three options

1) Just pretend the 1099 I got doesn't exist, tear it up, and don't even enter it on my tax form. (Not clear if programs like H & R Block or Turbotax will even let me file without it being rejected by the IRS)

2) Guess I might have paid $495 and hope like hell it doesn't get flagged for audit with penalties and interest

3) Pay income taxes on the entire $500.

#1 sounds like tax fraud to me, and the IRS might force me to prove #2 with a receipt, but if DU says it's OK.......