Payment for Participation in Drug Clinical Trial

[Yardley CPA]

Client received 1099 Misc - Non-Employee Compensation in the amount of $800.  Client informed me she was in a drug trial for a medical condition she has had for many years and the company paid her to participate.  Should this be placed on Line 21, Other Income or Schedule C?  I'm leaning toward Line 21 on this one.  Thoughts?

 

[Lion EA]

 One and only drug trial?  I'd use Line 21 and warn her that she may get an IRS letter, to contact you for a response.  But explain what the IRS will be trying to match, self-employment, and the tax difference.  Let her decide.

[Possi]

If the IRS doesn't question charitable contributions on page 2 of a Sch C, I don't think they will be looking for SE tax on that little ol' 1099, right Rita? I'd blow it in there and not be concerned.

[kcjenkins]

She's not "in the business of being a medical guinea pig",  right?  Line 21 for sure.

 

[DANRVAN]

On ‎02‎/‎13‎/‎2016 at 1:28 PM, Possi said:

 I don't think they will be looking for SE tax on that little ol' 1099, right Rita? I'd blow it in there and not be concerned.

I would not count on it. Save your client the anxiety and expense of receiving an IRS letter by reporting it as both income and expense on schedule C, and line 21 of course.

[BulldogTom]

How about putting it on the C, adding about 1600 miles and throwing a loss against taxable income?

Just Kidding....but I would ask about the miles to go to and from the location, just in case I needed a contemporaneous mileage log in an IRS fight.  Sometimes, you do have to travel quite a ways to get to these locations, and it could be a medical miles situation.

Tom
Newark, CA

[Max W]

Enter the amount on line 21.  Then, enter the same amount on Sched C AND under Other Expenses, enter the same amount with - "1099MISC error - Offset to Line 21"

I have done this dozens of times and it has never been questioned.