1099 Form Income

[S T]

Business taxpayer (schedule C) purchased equipment in 2008. Manufacturer refunded taxpayer $2,000 rebate on purchase. (check sent and deposited)

I was going to reduce basis by the rebate amount then depreciate, however, the manufacturer sent the taxpayer a 1099 form for the rebate amount.

Should the rebate then be included as income and not reduce the basis amount for the depreciation?

Sandy

[Burke]

1099 form is in error. Should not have been sent on a rebate.

[S T]

Rebate

Yes, I know it is incorrect. However, t/p has it and we all know that we won't have any luck in obtaining a corrected or void 1099 form.

What way is the best to report on the Tax Return?

Sandy

[ChEAr$]

Continue to march

Yes, I know it is incorrect. However, t/p has it and we all know that we won't have any luck in obtaining a corrected or void 1099 form.

What way is the best to report on the Tax Return?

Sandy

that is, just do it the right way and don't worry about IRS trying to match up a stray 1099.

[Jesse]

If it was a bonafide rebate I think the basis needs to be reduced.

Does he have Schedule C income of $2,000 or greater that was not reported on a 1099MISC?

If so the 1099MISC of $2,000 would match schedule C income so I would just reduce the basis and ignore the 1099MISC.

If not, report as income on page1 of the Schedule C and deduct as other expense on page 2 of the Schedule C.

I've done "dummy" Sched C's to avoid mismatching for things such as prizes that should have been reported as "other income", but in error reported as "non-employee compensation". I enter the amount as income page 1 Schedule C and deduct on page 2 with an explanation of "Prize misreported transferred to 1040 line 21". I've yet to receive a follow up letter from IRS.

[S T]

Thanks Harlan and Jesse

I think what I am going to do, as I have this "****" 1099 form in front of me, and it is showing Box 7, is show it on line one 1 as income for general audit purposes on the return, then another line item to reverse it to the reduction of basis.

At least I acknowledged and made a note of it and reduced basis accordingly, and also addressed the form 1099.

Yes Jesse, we have $600K in receipts so the 1099 gets lost in the "shuffle" but still I don't want to have to address it later 3 years from now.

Thanks you two for your input and your confirmation! I need all of virtual support I can receive about right now and it is only February 25th!

Let me know if I can assist you as well.

Sandy

[Jesse]

Sandy,
You are always a great help and it's nice to be able to reciprocate once in awhile!