1099Misc for a Tuba

[DaveO]

Client comes in with a 1099misc from a School district in VA for $2500

I say "Whats the 1099 for?"
c: I sold them a tuba.
m: Are you in the business of selling tubas?
c: No
m: How did you get the tuba?
c: I bought it and played it in the school band.
m: How much did you pay for it?
c: $4500

So, should I
a. Put on a schedule C showing COS of $2500 to zero it out.
b. Put it on line 21.
c. Put it on Schedule "D" as a personal sale disallowing the loss.
d. Contact the school and insit they fix it.

At least this was my comic relief for the day.

[jainen]

Feeling uncharacteristic

>>Contact the school and insist they fix it<<

Is the tuba broken?

Feeling uncharacteristically generous today, I propose option e.

e. Claim $2000 charitable contribution for the bargain sale.

[DaveO]

I hadn't thought of Option E

That's a ggod one and I'd use it if they had a Schedule A.

[jainen]

that is the correct way

>>I'd use it if they had a Schedule A<<

Since you feel that is the correct way, obviously you won't be taking any of the other actions.

[DaveO]

Another option

Would be to attach a schedule explaining the 1099 was issued incorrectly for the sale of a personal asset and therefore is not includable in gross income. But with an e-filed return I fear the matching program will kick it out leaving the taxpayer with a notice.

Using it on the schedule "A" poses the same problem. Nothing to tell the IRS that the 1099 is reported.

Reporting it on "D" as a personal sale might work but again the IRS is looking for a line 21 entry or a schedule "C" and likely would not pick it up.

Treating it as a hobby sale and backing out COGS to the extent of income on line 21 is the route I believe I'm going to take.

[Snaggletooth]

Which Line?

Where did they mark the $2500? Non-employee compensation (wrong)? Rent (wrong)?
Merchandise over $500? (probably wrong)

1099 for a Tuba. Now I've heard it all. That's why I love this board.

[jainen]

Shoulda been

>>1099 for a Tuba<<

Shoulda been a 1099-C for relief of liability. I'll bet the kid is real happy he doesn't have to play that monster any more.

[DaveO]

Amen to that

>>1099 for a Tuba<<

Shoulda been a 1099-C for relief of liability. I'll bet the kid is real happy he doesn't have to play that monster any more.

And Snag, they marked it non-employee compensation

[OldJack]

A fine example of the intelligence of our educators!!

Put it on a schedule for 1040 line 21 and then on the second line of the schedule subtract it off with a brief explanation that the issuer acted in stupidity.

It is not a sale for Sch-D (personal asset no gain or loss), Sch-A, and definitely not a charity contribution as the IRS, the school, and your client would agree that it was at fair market value.

[jainen]

the schools are broke

>>the intelligence of our educators<<

Don't blame the teachers, Old J. This comes from the school bureaucracy. Their accounting office doesn't know what it's doing, and it's no wonder the schools are broke.

[Kram BergGold]

Final Answer

Wash it off Schedule C with the explanation that it was a sale of a non business item sold at a loss and that is it.

[OldJack]

>>the intelligence of our educators<<

Don't blame the teachers, Old J. This comes from the school bureaucracy. Their accounting office doesn't know what it's doing, and it's no wonder the schools are broke.

The teachers hire the so-called accountants that most likely have never counted in their life. I have had many teacher clients, in the past, that knew everything except common sense and all those things that they didn't know that the didn't know they didn't know. Teachers may be smart in their subject, but as a whole most teachers only think they are smart.

[jainen]

Not for me

>>that is it<<

Not for me it isn't. I wouldn't bring Schedule C into this at all, and I wouldn't bother rationalizing an incorrect 1099 that someone else issued. A sale of a capital asset belongs on Schedule D, with no loss recognized because it's personal use.

[OldJack]

>>A sale of a capital asset belongs on Schedule D,<<

A sale of a personal capital asset at a non-deductible loss does not belong on Sch-D or anywhere else on the 1040 tax return. The 1099Misc issued in "error" needs to be dealt with as an error and that would most logically be on 1040 line 21 with an attached statement.

[Jesse]

Wash it off Schedule C with the explanation that it was a sale of a non business item sold at a loss and that is it.

A couple of years ago I had a radio station enter prize awarded of $1,600 as nonemployee comp on the 1099MISC and I put it on Line 21. Taxpayer received notice warning this "might" be subject to SE tax. If reported wrong file 1040X If correct do nothing type letter w/ schedule C and 1040 X and instructions enclosed. I thought the taxpayer was going to have a heart attack.

Last year different client, same radio station anothe 1099MISC as nonemployee comp for $2,200. I put it on a schedule C with other expense "Prize awarded transferred to Line 21" $2,200 to zero it out. Right or wrong taxpayer has yet to receive any correspondence.