home parties/ direct sellers

[kathyc2]

I've been lucky enough to not have any of these for the last couple years, but they seem to be coming out of the woodwork this year.

Working on one now for Young Living Oils. The set-up on this one is that consultant does not actually buy inventory, but instead receives a commission for everyone that places orders under her name.
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This company also requires that consultant orders a minimum of $100 product/month under her name. I've always held the opinion that if for her own personal use, then not a deduction. It appears some other preparers take the position that since it's a requirement of being a consultant it is 100% deductible.

Thoughts?

[JohnH]

Personal use product purchases are not deductible.
Minimum purchase requirements are irrelevant to this issue.

[ATSMAN]

I agree with John that if it is "Personal Use" then it is not deductible BUT a lot of these people give away samples to potential clients and to good customers. My sister in law does Avon and she is constantly giving out "stuff" as samples etc. We deduct the cost of that because it is ordinary and necessary in that line of business to give out samples to clients and potential clients before they will buy from you.

So did this person actually use that on her body or give it out as samples??

[oceanlovin'ea]

I agree. If she uses the oils herself or uses them for family use, it is personal use. My mother sells Nature's Sunshine PRoducts which is herbs and vitamins. What she takes is personal use and what my husband and I take are personal use. Too close of a relationship to be called samples every month.(I am also part of her business) But on occasion she will send samples to other family members who want to try something. That we deduct.

She gives out samples to other customers which we do write off as an expense.

I know that it can be a balancing situation. You can't recommend products you have not tried but you can't write off all your product just so you can try it. You have to be reasonable.

Linda, EA

[joanmcq]

I had a client trying to write off a minimum purchase for one of these companies. I told her that if having to buy $100 of product for herself to get to where she could make a few dollars of commission from others as a good biz strategy for the MLM company, but not necessarily for the distributors. It was such a pain separating samples from personal use, not to mention the low income she was getting, that she dropped it after too years of trying to make it rich.

[Burke]

AGREE 100%! Most of the distributors in these schemes who are making the big bucks are because they are recruiting new distributors all the time and getting a cut of their sales. Almost like a Ponzi scheme. Unless someone is willing to spend their time FULL-time in these businesses, I advise them to stay out of them.

[kathyc2]

Thanks for the confirmations that I was on the right track. This one may be the exception of someone who actually makes money. Her first year and 1099 for 15K.

[Burke]

Thanks for the confirmations that I was on the right track. This one may be the exception of someone who actually makes money. Her first year and 1099 for 15K.

It will be interesting to see how she does this year, once all the relatives and friends have been tapped. There are exceptions, and good luck to her in the endeavor.