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Getting paid partially in earmarked funds (quasi giftcard)

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faitdumal

Junior Member
I participate as a seller in an e-commerce scheme that splits my receipts into cash and electronic points. Example: a buyer pays $10 to transact with me, $9 of which go into my checking account and $1 into an electronic account as points (transaction through the e-commerce intermediary). Points do not convert 1 to 1 to $ and cannot be redeemed for cash, but only used as a quasi gift card at participating retailers. How am I to treat this from a tax perspective?
 


Silverplum

Senior Member
I participate as a seller in an e-commerce scheme that splits my receipts into cash and electronic points. Example: a buyer pays $10 to transact with me, $9 of which go into my checking account and $1 into an electronic account as points (transaction through the e-commerce intermediary). Points do not convert 1 to 1 to $ and cannot be redeemed for cash, but only used as a quasi gift card at participating retailers. How am I to treat this from a tax perspective?
What is the name of your state? US law only.
 

LdiJ

Senior Member
I participate as a seller in an e-commerce scheme that splits my receipts into cash and electronic points. Example: a buyer pays $10 to transact with me, $9 of which go into my checking account and $1 into an electronic account as points (transaction through the e-commerce intermediary). Points do not convert 1 to 1 to $ and cannot be redeemed for cash, but only used as a quasi gift card at participating retailers. How am I to treat this from a tax perspective?
Part of it will determine how the payer handles the transaction. I am nearly certain that the payer will report the entire 10.00 per transaction on a 1099 Misc, which will require you to report the entire amount as gross income on your Schedule C. However, since the 1 dollar "points" are not a 1 dollar to 1 dollar ratio, you could record an expense on your Schedule C for the reduction in the buying power of that 1 dollar.
 

Zigner

Senior Member, Non-Attorney
Part of it will determine how the payer handles the transaction. I am nearly certain that the payer will report the entire 10.00 per transaction on a 1099 Misc, which will require you to report the entire amount as gross income on your Schedule C. However, since the 1 dollar "points" are not a 1 dollar to 1 dollar ratio, you could record an expense on your Schedule C for the reduction in the buying power of that 1 dollar.
What does form 1099 Misc do in Canada?
 

Zigner

Senior Member, Non-Attorney
Huh? This is another one of your cryptic comments that not everybody gets.
7 minutes before you posted, it was pointed out that the OP didn't provide a state or even a country that s/he is from. Then, you posted adviced that is United States specific. We don't know if the OP is even from the US.
 

LdiJ

Senior Member
7 minutes before you posted, it was pointed out that the OP didn't provide a state or even a country that s/he is from. Then, you posted adviced that is United States specific. We don't know if the OP is even from the US.
He doesn't spell like a Canadian or a Brit. His English is too good to be from a non-English speaking country. The question isn't state specific either.
 

Zigner

Senior Member, Non-Attorney
He doesn't spell like a Canadian or a Brit. His English is too good to be from a non-English speaking country. The question isn't state specific either.
Yes, I agree. It still doesn't change the fact that the OP didn't tell us even the name of the country he's posting from. Right?
 

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