Tupperware 1099-Misc

[joanmcq]

New client sold tupperware for awhile. 1099 shows only $1470.55 of sales in box 7, but box 9 is checked that the payer made over 5k in direct sales to a buyer for resale. The back of the 1099 has a list of items, prices & codes, one of which is 'retail sales 2011' for $7367. Could the $7367 be the gross sales and $1470.55 the net?

[Jesse]

Thinking out loud...

New client sold tupperware for awhile. 1099 shows only $1470.55 of sales in box 7, but box 9 is checked that the payer made over 5k in direct sales to a buyer for resale. The back of the 1099 has a list of items, prices & codes, one of which is 'retail sales 2011' for $7367. Could the $7367 be the gross sales and $1470.55 the net?

Could it be that the $7367 is the gross sales and in addition the Tupperware consultant received an additional $1470.55 in commissions/awards?

I haven't come across any this year but in past I had one for a direct sales company (?Party-lite or Pampered Chef?) and box 9 was checked and the amount in box 7 was bonus received from the company for selling of certain products or making bonus goals, and also commissions from other sellers recruited to sell the same product line.

[Koss]

Tupperware

Could the $7367 be the gross sales and $1470.55 the net?

Well, maybe.

I have a client that sells Mary Kay, and she gets the same kind of numbers.

The customers order from a catalog. Somehow, I think the customer pays Mary Kay directly, so my client doesn't touch the money. Based on an established mark-up, Mary Kay then sends a check to my client.

So the difference between those two numbers is the cost of goods sold.

In theory, the client doesn't maintain an inventory, because everything ships directly from Mary Kay to the customer. So in a perfect world, inventory at the beginning of the year and at the end of the year will both be zero. For your client, that may or may not be the case.

If your client does maintain some inventory, and actually sells some product directly to her customers, without having them place a catalog order, then your world just got more complicated, because now you have some sales that are not reflected on the 1099-MISC.

BMK

[oceanlovin'ea]

The 1099 will not provide you with all the information that you need to prepare the return.

If they sell at retail, they need to give you the amount of money they received from the merchandise they sold and then the cost of that mdse. They will also have other expenses of selling the mdse.

If they have people under them that also sell mdse and they get a portion of the profit from what they sell, they have income from that.

My mother gets a statement from her company each month. She receives a check that covers what she receives from her downline and her discount. But she sells product to people in addition. So she keeps track of her sales. She doesn't sell at retail prices but at a price a little higher than her cost. So we subtract her cost from her sales and that is profit too. That is in addition to the statement from the company. Then you can deduct all of the expenses.

You might have to train this person to give you the right information.

Linda, EA

[joanmcq]

From what he described to me, Koss has it correct. There are no downlines, and he kept no inventory.

Direct sales is a bit different than MLM. Companies like Tupperware or Pampered Chef don't require you to buy a ton of stuff and resell it. It's all through a catalog and then drop shipped.

But I was hoping the difference was COGS; I don't do many of these (and the client stopped as well, so this is a one time deal).

Thanks, all...I am bleary-eyed and ready for a tub, shower & some sleep.

[JG EA]

Try to get them to report to you:
Total money collected and the amount they sent to the company.
Also try to get the amount they spent on personal items for themselves, friends, and relatives since those amounts do not get subtracted from the money taken in.