1099-Received box 7+9 filled out- Im a reseller?

[wad2k2]

What is the name of your state? NY

I run a part time home business(sole prop.) in which I buy and resell video equipment. The corporation that purchases the equipment from me,who is also a reseller, sent me a a 1099-misc. On the 1099, in box 7(nonemployee compensation), they entered the the amount of total sales. This is the total amount for the goods they purchased from me. They also checked box #9(direct sales of $5000 or more..) on the form.

I thought that box 7 is only for services performed over $600? (Eg. they would pay a landscaper to cut their lawn)

They are buying the items directly from me. I don't perform any service other than turning papers and shipping the items.

Did they do this right? Is this a normal practice. I don't remeber receiving a 1099 from them the previous year.

Thanks in advance!
Wade

 

[LdiJ]

What is the name of your state? NY

I run a part time home business(sole prop.) in which I buy and resell video equipment. The corporation that purchases the equipment from me,who is also a reseller, sent me a a 1099-misc. On the 1099, in box 7(nonemployee compensation), they entered the the amount of total sales. This is the total amount for the goods they purchased from me. They also checked box #9(direct sales of $5000 or more..) on the form.

I thought that box 7 is only for services performed over $600? (Eg. they would pay a landscaper to cut their lawn)

They are buying the items directly from me. I don't perform any service other than turning papers and shipping the items.

Did they do this right? Is this a normal practice. I don't remeber receiving a 1099 from them the previous year.

Thanks in advance!
Wade

Yes, that is correct practice. They need to demonstrate that they purchased the items from you for their "cost of goods sold". It wouldn't be necessary if you were a corporation, however if you are not they needed to do that.

You, in turn, need to report that income on your schedule C and deduct the appropriate expenses.

 

[wad2k2]

Great.. Thanks alot for the quick reply..That puts my mind at ease...Glad I found this website!
Wade

 

[anteater]

Yes, that is correct practice. They need to demonstrate that they purchased the items from you for their "cost of goods sold". It wouldn't be necessary if you were a corporation, however if you are not they needed to do that.

You, in turn, need to report that income on your schedule C and deduct the appropriate expenses.

While I agree about reporting on the OP's Schedule C, are you sure that the corporation is doing this right? The instructions for Box 9 are:

"Enter an “X” in the checkbox for sales by you of $5,000 or more
of consumer products to a person on a buy-sell, deposit-commission, or other commission basis for resale (by
the buyer or any other person) anywhere other than in a retail establishment."

That doesn't sound to be the case here.