Multi level sales people

[oceanlovin'ea]

I have 2 clients who received 1099-misc with non-employee compensation for commissions from multi-level marketing companies. One sells herbal products and one sells cosmetics. Both qualified to attend the companies annual convention. The value or cost of the convention/travel/conference was included in the amount of non-employee compensation.

I would think that the convention would be more like an award or gift you won rather than something that you end up paying SE tax on. The commissions you earn is definitely SE income but I am not convinced that the convention should be included there. It is not earned money.

What is your opinion? Would you enter it as income and back it out as expense and then put it on line 22?

Linda, EA

[rtsietsema]

Use income and expense

I created a question similar to this. I am unsure I am posting correctly, but the copied link listed here will show you the responses to my query. I found the forum's response most helpful.

http://forum.thetaxbook.com/showthread.php?21559-Non-monetary-compensation-on-1099

[David1980]

I'd think you could net it out anyway. Say they value the convention at $1,000. If you include the $1,000 in income for the business couldn't you then claim a deduction for the conference in the same amount?

[oceanlovin'ea]

Thanks

I was thinking that I had asked the question before but just looked for a question that I had posted down the left side of the screen.

Yes, in both cases the trip or convention was business related. So it would just be a wash. in and out.

Thanks

Linda, EA