My client served as an egg donor (reproductive, not Easter), and received $8,000, reported on box 3 if 1099-misc. Clearly income to report - but schedule C income, or other income on line 21? I googled egg donor, and got some links indicating that it should be reported on C, but I'm not sure.
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Trade or Business?
Generally, Box 3 of Form 1099-MISC reflects income that is not subject to self-employment tax.
With that being said, it is not the reporting document that determines the tax treatment of an item; rather, it is the nature of the income or transaction that determines its status.
Nevertheless, the reporting document is usually a reflection of how the reporting party has chosen to treat the item. So the information return is often, but not always, a guide to the nature of the transaction.
Is the person engaged in the trade or business of selling eggs?
Or was this a one-shot deal?
Maybe it's capital gain...
Is human tissue a capital asset?
It seems like it might be personal-use property...
But then again, a human being or any part thereof might not be considered property at all.
Maybe the payment merely reduces the taxpayer's basis in her body...
[LMAO]
Okay, it's getting late. I've been doing this for too many years. The one thing I've learned is that if you don't develop a really warped sense of humor, you will go stark raving mad in this business.
BMKBurton M. Koss
koss@usakoss.net
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The map is not the territory...
and the instruction book is not the process. -
All kidding aside
Burton at the risk of egging you on, I have to say I enjoyed your post. Now I will try to render a serious opinion in answer to the question.
The one serious point Burton made was that by the choice of the box it was put in the buyer of the eggs indicated an opinion that SE Tax is not due on this money, but that what governs is not their opinion but the facts and circumstances of the taxpayer's life and of course the relevant law.
I don't think she is in the trade or business of selling eggs because she probably doesn't do such things as business planning, advertising, and attempting to obtain more eggs than she was born with that we would expect of someone who was in a business. That and the 1099 would convince me not to do a Sch C even if by some chance there was a benefit to her such as an increase in EIC.
I also don't think her eggs are a capital asset but if you want look up that term in the TTB 1040 or Deluxe Edition index and see for yourself. It would be nice to tax the money at the lower capital gains rate but I don't think it would stand up in an audit.
That leaves Line 21 where I would choose a label such as "Hobby Income" if I could not put in something more accurate.Comment
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After searching around on this forum for a post which I absolutely knew I had seen, it suddenly dawned on me that it was discussed over on the ATX Forum last tax season. I fyou participate ove rthere, you can find it with a search on "Eggs Donor Income".
The consensus there was also Line 21, no S/E income, and no incidental expenses allowable, since deducting expenses would conflict with the assertion that it isn't a trade or business."The only function of economic forecasting is to make astrology look respectful" - John Kenneth GalbraithComment
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I agree, if she is not in the business of donating eggs and this was a one time thing. Box 3 is correct and ln 21 is correct.
To be a business Sch C issue she would have to be doing this consistantly and with a business intent.
Just an aside....how come eggs can be sold and organs can't? Doesn't make sense to me. taxeaBelieve nothing you have not personally researched and verified.Comment
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