Peoples Court - 1099 Misc

[Yardley CPA]

Single client appeared on The Peoples Court.   She one her litigation and received a 1099-Misc, Other Income,  for the amount, $1,429.  She also incurred expenses including travel and other administrative fees to appear.  I assume none of that is deductible?  Maybe if I created a Schedule C but this doesn't seem like a Schedule C to me.  Thoughts please. 

[Gail in Virginia]

I am inclined to agree with you although if the litigation resulted in compensatory damages, I would not have though it would be taxable or reported on a 1099. 

[ILLMAS]

I thought they were paid a appearance fee no matter if they win or lose the case.

[Yardley CPA]

1 hour ago, ILLMAS said:

I thought they were paid a appearance fee no matter if they win or lose the case.

I do have a call into the client to get some clarification.  Assuming it is just that, an appearance fee, I assume it should flow to Other Income?  No opportunity to take any fees against it?

[Catherine]

Facts and circumstances.  Compensatory damages should not be taxed.  Appearance fee is "other income" (formerly Line 21) as the person is not in the business of appearing on the People's Court for profit.

[BLACK BART]

On ‎3‎/‎30‎/‎2019 at 12:35 PM, Gail in Virginia said:

I am inclined to agree with you although if the litigation resulted in compensatory damages, I would not have though it would be taxable or reported on a 1099. 

Depends.

Appearances on:

Milian - produces smiles, other income, line 21. 

Judy - the judge should get a 1099 for your emotional distress.

Springer - no 1099 should be issued since your physical injury is not taxable.

[BHoffman]

I have a new client who received a 1099M box 7 for appearing in an online teaching video.  The 1099M amount is around$4k.  She says she does this every year for the same company and had no expenses.  Her 2017 tax return shows as reported on line 21 Other income not subject to SE tax.  I'm not sure what to do.  She is a full time elementary school teacher and has no intention of pursuing this online video activity as a business.  Any advice or opinions?

 

 

[Lion EA]

Schedule C. Or line 21 WITH SE.

[BHoffman]

It seemed obvious to me as well but the fact that she isn’t actively pursuing this as bonafide business and Catherine’s comment about an appearance fee got me overthinking the thing.  

[Lion EA]

She is a teacher in her day job, and she does this every year for the same company. She gets paid; she's not volunteering her time.

[Jack from Ohio]

Schedule C,  or CEZ.  Then calculate SE.  Line 21, with SE will result in a letter next year, possible from state & Local, as well as Federal.

Forget Line 21.

[BHoffman]

That’s where it’s going.  Overthinking, and they are going to owe around $2k due to underwithholding.  Ugly.

[Catherine]

On 3/31/2019 at 6:25 PM, BHoffman said:

It seemed obvious to me as well but the fact that she isn’t actively pursuing this as bonafide business and Catherine’s comment about an appearance fee got me overthinking the thing.  

Easy to overthink - but she's doing this annually, and getting paid.  Facts and circumstances here push to SE.

[BHoffman]

Remember this client?  She sent me an email saying that Turbox comes up with them owing less tax.  Exactly the amount if the 1099M info is entered on line 21 and not subject to SE tax.  She wants to file the Turbox version naturally although she did offer to pay for my services anyway.  I responded that the difference was due to self employment tax, she didn't owe me anything, and have a great day.

[Lion EA]

And, have a nice life!

[Bart]

and have a nice audit