Multi Level Marketing

[PatriciaGold]

In a multi level marketing company for essential oils it is required that the member purchase 100 pv, which is equivalent of $100 in order to receive a commission check. All of the oils that are ordered are used for customer sampling. Some amounts of the bottles are used personally. But there are none that are exclusive to member. Can both the purchase of the oils and the $100 purchase be used on the tax return? Respectfully, Patricia

[momona]

I don't know if this will help but

The rules may have changed but a few years ago, at a seminar, I was told that the IRS treats multi-level sales as hobby income and losses. Professionally, I have found that scenario to be true.

Your question is unclear. The taxpayer must buy at least $100 worth of product to get a commission. Some are given out as samples and some are taken out for personal use. You mention taking another $100 for purchases. Is that in reference to the initial $100? If so, the answer is no. But even if it isn't true, you still can't because you need to take into account ending inventory.

You cannot deduct the initial $100, either. You need to take out ending inventory and items taken out for personal use. What is remaining is allocated to samples and purchases/cost of goods sold

[kathyc2]

In a multi level marketing company for essential oils it is required that the member purchase 100 pv, which is equivalent of $100 in order to receive a commission check. All of the oils that are ordered are used for customer sampling. Some amounts of the bottles are used personally. But there are none that are exclusive to member. Can both the purchase of the oils and the $100 purchase be used on the tax return? Respectfully, Patricia

I know they always try to tell you that it's a tax deduction, but it's not IMO if they use the required purchases for personal use. I ran across an excellent article on this some time back, but can't seem to find it right now.