MS on Event Tickets
Apr 22, 2019, 6:41 pm
#16
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The tickets are purchased on behalf of a ticket broker. The friendship is irrelevant. The broker will record the reimbursement, and use it for their own accounting and tax purposes to establish the cost of goods sold. The broker should send the OP a 1099 to document the payment. We cannot know if this will actually happen, but I would keep good records.
No, the broker will record it as a purchase.
In any event, if OP got audited, the outcome would be a wash.
Apr 23, 2019, 11:54 am
#17
Join Date: Jul 2012
Posts: 205
Apr 23, 2019, 11:57 am
#18
Join Date: Jul 2012
Posts: 205
Those are job-related expenses. The OP buying event tickets on behalf of a friend, and then being reimbursed by the friend, are not job-related. Nor is my restaurant example job-related. My example is quite apt: Should I report to the IRS when my friends repay me for their meals? The answer, of course, is “no.”
Apr 23, 2019, 2:58 pm
#19
Join Date: Sep 2009
Posts: 2,832
I am qualified to discuss this because for the past 45 years I have been licensed to practice law in both state and federal courts.
So, using what you learned in your high school business 101 class, please tell us how the Internal Revenue Code would distinguish the following two scenarios:
Scenario #1 : You share a restaurant meal with a friend. By prior arrangement, the friend later reimburses you for the cost of his/her share of the meal.
Scenario #2 : Your friend needs four tickets to an upcoming concert, but is allowed to buy only two tickets. By prior arrangement, you buy two tickets for him/her, and the friend later reimburses you for the cost of the tickets.
Please compare and contrast. And please keep your eyes on your own paper.
Apr 23, 2019, 6:17 pm
#20
Join Date: Sep 2009
Posts: 2,832
“Use Schedule C (Form 1040) to report income or (loss) from a business you operated or a profession you practiced as a sole proprietor. An activity qualifies as a business if your primary purpose for engaging in the activity is for income or profit and you are involved in the activity with continuity and regularity. For example, a sporadic activity or a hobby does not qualify as a business.”
Since you indicate that the OP is selling the tickets “at cost,” and the OP has indicated that the transactions “have no impact on my revenue,” then the IRS does not deem this to be a business and Schedule C is not appropriate.
The OP is clearly not “engaging in the activity for income or profit.”
Please do not spread misinformation on a topic you are not qualified to discuss.
Last edited by Steve in Olympia; Apr 23, 2019 at 7:21 pm
Apr 24, 2019, 12:30 am
#21
Join Date: Jul 2012
Posts: 205
Originally Posted by Steve in Olympia
Since you indicate that the OP is selling the tickets “at cost,” and the OP has indicated that the transactions “have no impact on my revenue,” then the IRS does not deem this to be a business and Schedule C is not appropriate.
The OP is clearly not “engaging in the activity for income or profit.”
The OP is clearly not “engaging in the activity for income or profit.”
Based on the credit card being used, that value could be up to several cents per point. Also, Chase and American Express both sent out 1099s for referral point bonuses this year, further evidence that points have real monetary value. OP is basically receiving an in kind payment for his "work" in the form of credit card points/miles.
OP's friend is a business, and will certainly be expensing his payments to OP for the tickets, as the payment is a business expense, of which OP is on the receiving end. Based on IRS rules, the payments received by OP would be considered income, and should be reported. In order to avoid tax liability on the received income, OP would need to deduct his expenses, on, you guessed it (or maybe not apparently), a Schedule C.
For any further questions, please refer to: http://amzn.com/0078747686
Apr 24, 2019, 2:01 am
#22
Join Date: Aug 2017
Posts: 106
I think the primary question here is how does IRS define a business. From their guideline for Schedule C:
"An activity qualifies as a business if your primary purpose for engaging in the activity is for income or profit and you are involved in the activity with continuity and regularity."
Source: https://www.irs.gov/instructions/i1040sc
If this ticket was a one or few times thing it can be explained away as a favor for a friend but (referring to the latter part in the quote above) if done on a regular basis then it would be a business.
"An activity qualifies as a business if your primary purpose for engaging in the activity is for income or profit and you are involved in the activity with continuity and regularity."
Source: https://www.irs.gov/instructions/i1040sc
If this ticket was a one or few times thing it can be explained away as a favor for a friend but (referring to the latter part in the quote above) if done on a regular basis then it would be a business.
Apr 24, 2019, 6:24 am
#23
Join Date: Jan 2017
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To negate this, I would simply make a folder in email titled "Ticket Sales" (or something like that), putting all of the ticket orders in that folder, and, if paid electronically by your friend, any email you get saying that a transaction occurred.
I would never look at the folder unless you need to balance something or the tax man comes calling.
Apr 24, 2019, 8:27 am
#24
Join Date: Sep 2009
Posts: 2,832
i am still waiting for you to distinguish the following scenarios from my earlier post:
Scenario #1 : You share a weekly restaurant meal with a friend. By prior arrangement, the friend later reimburses you for the cost of his/her share of the meal. You paid for the meal because you wanted to earn points.
Scenario #2 : Your friend frequently needs four tickets to upcoming concerts, but is allowed to buy only two tickets. By prior arrangement, you buy two tickets for him/her, and the friend later reimburses you for the cost of the tickets. You paid for the tickets because you wanted to earn points.
FTers are all going to need a lot of Schedule C’s!
Will we need to file a Schedule C for your valuable legal advice? Are we allowed to report that value as “zero”?
Last edited by Steve in Olympia; Apr 24, 2019 at 8:37 am
Apr 25, 2019, 11:04 am
#25
Join Date: Sep 2014
Posts: 201
I'd have to agree with Steve here. I am not a lawyer, and I do enjoy this discussion.
My first thought was, if my CC statement shows I'm going to events, like concerts, and WWE, and I was audited. I would say 'I like going to events, alot' I don't know how I could or would be taxed for simply going to events, alot.
The way I see it, he's just buying tickets to enjoy an event, but he decided to sell his tickets to a friend, for whatever reason (weather, kids, hot date, work, etc), his friend also likes to go to events too. Maybe I'm wrong.
My first thought was, if my CC statement shows I'm going to events, like concerts, and WWE, and I was audited. I would say 'I like going to events, alot' I don't know how I could or would be taxed for simply going to events, alot.
The way I see it, he's just buying tickets to enjoy an event, but he decided to sell his tickets to a friend, for whatever reason (weather, kids, hot date, work, etc), his friend also likes to go to events too. Maybe I'm wrong.
Apr 25, 2019, 12:49 pm
#26
Join Date: Jul 2012
Posts: 205
Under this strained logic, every person on this thread who buys a Visa Gift Card and cashes it out at WalMart would need to file a Schedule C for the value of the points! Brilliant!
i am still waiting for you to distinguish the following scenarios from my earlier post:
Scenario #1 : You share a weekly restaurant meal with a friend. By prior arrangement, the friend later reimburses you for the cost of his/her share of the meal. You paid for the meal because you wanted to earn points.
Scenario #2 : Your friend frequently needs four tickets to upcoming concerts, but is allowed to buy only two tickets. By prior arrangement, you buy two tickets for him/her, and the friend later reimburses you for the cost of the tickets. You paid for the tickets because you wanted to earn points.
FTers are all going to need a lot of Schedule C’s!
Will we need to file a Schedule C for your valuable legal advice? Are we allowed to report that value as “zero”?
Apr 25, 2019, 12:52 pm
#27
Join Date: Jul 2012
Posts: 205
I think the primary question here is how does IRS define a business. From their guideline for Schedule C:
"An activity qualifies as a business if your primary purpose for engaging in the activity is for income or profit and you are involved in the activity with continuity and regularity."
Source: https://www.irs.gov/instructions/i1040sc
If this ticket was a one or few times thing it can be explained away as a favor for a friend but (referring to the latter part in the quote above) if done on a regular basis then it would be a business.
"An activity qualifies as a business if your primary purpose for engaging in the activity is for income or profit and you are involved in the activity with continuity and regularity."
Source: https://www.irs.gov/instructions/i1040sc
If this ticket was a one or few times thing it can be explained away as a favor for a friend but (referring to the latter part in the quote above) if done on a regular basis then it would be a business.
Apr 25, 2019, 10:04 pm
#28
Join Date: Sep 2009
Posts: 2,832
I think the primary question here is how does IRS define a business. From their guideline for Schedule C:
"An activity qualifies as a business if your primary purpose for engaging in the activity is for income or profit and you are involved in the activity with continuity and regularity."
Source: https://www.irs.gov/instructions/i1040sc
If this ticket was a one or few times thing it can be explained away as a favor for a friend but (referring to the latter part in the quote above) if done on a regular basis then it would be a business.
"An activity qualifies as a business if your primary purpose for engaging in the activity is for income or profit and you are involved in the activity with continuity and regularity."
Source: https://www.irs.gov/instructions/i1040sc
If this ticket was a one or few times thing it can be explained away as a favor for a friend but (referring to the latter part in the quote above) if done on a regular basis then it would be a business.
(1) The activity is “for income or profit,” AND
(2) The activity is done on a regular basis.
We have already established (and the OP agrees) that there is no net income or profit, nor any desire for income or profit. Therefore, the OP’s ticket purchases fail to satisfy the first criterion, rendering the second criteriion moot.
(if the second criterion were the sole test, then every FTer who buys Visa gift cards every week would be a business, as I have pointed out previously.)
Repeatedly in this thread (posts 7, 19, and 24), I have posited several detailed scenarios that appear to be indistinguishable from the OP’s situation (buying gift cards, restaurant meals, concert tickets, etc.). I am still waiting for my chief critic to distinguish these scenarios. The silence is quite telling —— they cannot be distinguished.
The OP is not conducting a business, filing a Schedule C will not make a penny difference in his/her taxes, and the IRS doesn’t care.
Apr 26, 2019, 5:39 am
#29
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.... Your friend frequently needs four tickets to upcoming concerts, but is allowed to buy only two tickets. By prior arrangement, you buy two tickets for him/her, and the friend later reimburses you for the cost of the tickets. You paid for the tickets because you wanted to earn points.
....because you wanted to earn points means that the activity is “for income or profit,”
Your friend should send you a 1099. Even if your friend does not do this, keep good records.
Apr 26, 2019, 6:30 am
#30
Join Date: Mar 2005
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The quotation from the IRS Guidelines is quite helpful. It is key that there are two criteria, joined by the conjunction “AND”. That means that BOTH criteria must be satisfied before the IRS will find that a business exists:
(1) The activity is “for income or profit,” AND
(2) The activity is done on a regular basis.
We have already established (and the OP agrees) that there is no net income or profit, nor any desire for income or profit. Therefore, the OP’s ticket purchases fail to satisfy the first criterion, rendering the second criteriion moot.
(if the second criterion were the sole test, then every FTer who buys Visa gift cards every week would be a business, as I have pointed out previously.)
Repeatedly in this thread (posts 7, 19, and 24), I have posited several detailed scenarios that appear to be indistinguishable from the OP’s situation (buying gift cards, restaurant meals, concert tickets, etc.). I am still waiting for my chief critic to distinguish these scenarios. The silence is quite telling —— they cannot be distinguished.
The OP is not conducting a business, filing a Schedule C will not make a penny difference in his/her taxes, and the IRS doesn’t care.
My suggestion to you. If you are a tax law expert, then you don't need our help or input.
On the other hand, if you aren't, then go find someone who is and seek their advice, pay for it if necessary and follow it.
I know through many years of participating in it that business tax law is complex, it is best to believe those who practice it for a living and to follow their advice. (Heck, it's only money and audits and time and...... if you're wrong
)