Are Discounted Gifts Considered Taxable Income for Home Business Owners?

[Nep2nfly]

So...this is my first year doing taxes with a home business, and it's been lots of "fun" figuring all these things out. One question that I haven't found an answer to yet is "gifts" - now I'm not talking host gifts - but discount "gifts" - or consultant "sales" where we give a discounted rate or free shipping as part of a promotion - what category does that fall under with taxes? I know this may be a ridiculous question - but I could use "an Idiots guide to direct sales business taxes" - does anyone know the answer to this?
Nancy

 

[Nep2nfly]

Anybody have an answer?

 

[Nep2nfly]

Does this go in "Discounts, rebates, refunds" area of taxes or does it go in MISC under gifts? Anybody!!!!

 

[NewbyPChef]

I don't think it matters which bucket you put your schedule C expenses in. There aren't too many options. If it bothers you to put it in a bucket that you don't think it really fits then you can just put it on the second page and label it "incentives" where they give you room to write it out. HOpe that helps. Now that I think about it, I lumped these types of things in with supplies b/c I was just looking at any discrepancies between what I deposit and what gets deducted for a show....plus if I order door prizes they go on a supply order...oh well.

 

[NooraK]

I don't think it matters which bucket you put your schedule C expenses in. There aren't too many options. If it bothers you to put it in a bucket that you don't think it really fits then you can just put it on the second page and label it "incentives" where they give you room to write it out. HOpe that helps. Now that I think about it, I lumped these types of things in with supplies b/c I was just looking at any discrepancies between what I deposit and what gets deducted for a show....plus if I order door prizes they go on a supply order...oh well.

The tax guy who came to talk to us about taxes at our Back 2 Business meeting said the IRS has rules about how much you can give in gifts per person and how much you can do in incentives, so I do think it matters what category you choose. I'm not good at saying what those categories are, which is why I decided to hand it off to a professional this year.