Form 1099 Misc

[S T]

I have a client that received a 1099 Misc Box 7 for $ 3,141 - she was the time keeper for AZ state election debates. This is not her normal business - she provided no event services under one of her businesses that is event management and planning. The amount also included some mileage reimbursement - question is how to report and not subject to SE tax, but offset the mileage reimbursement as well. She does not meet fiiing a Schedule A - so I would not be able to use mileage as charitable.

She has one business that is event management and planning, and another business that is teaching responsibilities and management on business etiquette.

Am hoping I can NOT subject this $ 3,141 to SE

Thoughts and how to report?

Thanks

Sandy

[JohnH]

You could report it on Line 21 and attach an explanatory note that the activity was not regular and continuous, referencing the Batok case which is used in this situation. ( Batok, TC Memo, 1992-727) You will probably need to forego the mileage deduction to do this, but it is probably worth doing that in order to gain the greater advantage.

But save all your info so you can send the same info again when the CP2000 arrives in 18-24 months.

[S T]

Thanks for the reference - client has records so waiting to receive how much of the $ 3,141 was fees for timekeeping and how much was milage reimbursement included on the 1099 Misc form.

More later for thoughts

S

[Roland Slugg]

I agree, generally, with JohnH's reply above. Report the income on line 21. The "Instructions for Recipient" printed on form 1099-MISC don't say to attach an explanation, so I would not attach one stating why the income is being reported on L-21 instead of on Schedule C. What I would attach, however, is a little statement something like the following:

Statement of Amount Reported on Form 1040, Line 21:

Fee received for timekeeping at political debates ... $3,141

Less -- Mileage - 200 miles @ $0.56 per mile .......... ( 112)

Net income from this one-time activity ........ $3,029

As the car ads say, your mileage may vary.

Added later:

Upon reflection I agree with those who objected to claiming the auto mileage. It would be a Schedule A deduction only, similar to an employee deducting legitimate mileage on F-2106.

[Gary2]

I agree, generally, with JohnH's reply above. Report the income on line 21. The "Instructions for Recipient" printed on form 1099-MISC don't say to attach an explanation, so I would not attach one stating why the income is being reported on L-21 instead of on Schedule C. What I would attach, however, is a little statement something like the following:

Statement of Amount Reported on Form 1040, Line 21:

Fee received for timekeeping at political debates ... $3,141

Less -- Mileage - 200 miles @ $0.56 per mile .......... ( 112)

Net income from this one-time activity ........ $3,029

What is the justification for deducting the mileage? JohnH's reply indicated this should be omitted.

[Burke]

I agree. If you take the position that this is not a trade or business subject to self-employment, then it is just part of the compensation she received and all reportable. The TP cannot have it both ways.

[Roberts]

Per 1040 instructions:
Taxable income.
Use line 21 to report any taxable income not reported elsewhere on your return or other schedules. List the type and amount of income. If necessary, include a statement showing the required information. For more details, see Miscellaneous Income in Pub. 525

So obviously, a statement explaining the income is reasonable.

Then when you go to Pub525
Activity not for profit. You must include on your return income from an activity from which you do not expect to make a profit. An example of this type of activity is a hobby or a farm you operate mostly for recreation and pleasure. Enter this income on Form 1040, line 21. Deductions for expenses related to the activity are limited. They cannot total more than the income you report and can be taken only if you itemize deductions on Schedule A (Form 1040).

[Gary2]

I'll just add one caveat: COGS can be taken on line 21.

[ATSMAN]

OP stated that "She has one business that is event management and planning, and another business that is teaching responsibilities and management on business etiquette."

I would be very careful showing the income in line 21. Did the taxpayer fill out a W9? Is there a prior business relationship.

Often times you find college students getting 1099-Misc for some "odd one time job" they did for someone, but if this taxpayer received other 1099-Misc it may be hard to prove that this should go on line 21.

[TAXNJ]

Excellent point

OP stated that "She has one business that is event management and planning, and another business that is teaching responsibilities and management on business etiquette."

I would be very careful showing the income in line 21. Did the taxpayer fill out a W9? Is there a prior business relationship.

Often times you find college students getting 1099-Misc for some "odd one time job" they did for someone, but if this taxpayer received other 1099-Misc it may be hard to prove that this should go on line 21.

EXCELLENT POINT. Especially with the type of business mentioned in the original post

[S T]

Taxpayer under the one business of event planning offered no event planning services for this 1099 - I questionned t/p on this. She had no prior business relationship with this organization - and was strictly contracted to be a "timekeeper" for the debates and traveled from one location to another where the debates were held and was given a schedule on dates and times. The W-9 form is in the taxpayer's SSN# not under either business EIN#

Sandy

[TAXNJ]

Decision

Taxpayer under the one business of event planning offered no event planning services for this 1099 - I questionned t/p on this. She had no prior business relationship with this organization - and was strictly contracted to be a "timekeeper" for the debates and traveled from one location to another where the debates were held and was given a schedule on dates and times. The W-9 form is in the taxpayer's SSN# not under either business EIN#

Sandy

Great. You received various comments to your scenario. Sounds like you are getting close to making a decision. Let us know.

[ATSMAN]

Taxpayer under the one business of event planning offered no event planning services for this 1099 - I questionned t/p on this. She had no prior business relationship with this organization - and was strictly contracted to be a "timekeeper" for the debates and traveled from one location to another where the debates were held and was given a schedule on dates and times. The W-9 form is in the taxpayer's SSN# not under either business EIN#

Sandy

Sandy, you answered your own question! " and was strictly contracted to be a "timekeeper"

If I contract with someone to perform some work for compensation but not as an employee, I think I am an independent contractor!

Please don't make this any more complicated and invite an E&O claim later, if a CP 2000 follows. IRS will get a copy of the 1099-Misc and they will match it to the return and not see SE and you have to now explain why. CYA!