It's not quite the same thing. However you book it, your income is based on money actually received and you would be deducting $10.00 from $65.00 worth of income paying taxes then on $55.00. In the referral fee scenario, you receive $75.00 and you pay out $10.00 with a taxable remainder of $75.00. Of course, you could always deposit the money in an offshore bank. Or just pretend you did, like those great guys over at Enron. David Love davidlovepianos@earthlink.net > [Original Message] > From: Arlin Hall <ahall12@austin.rr.com> > To: <pianotech@ptg.org> > Date: 1/30/2004 5:45:58 PM > Subject: Deductibility of referral fees, etc. > > Someone asked: > > "are discounts to Piano Dealers deductible? conceivably they might be > considered referal fees because they allow access to the piano service > market. " > > They certainly have the net effect of referral fees. Say for example, if > your normal price is $75. You pay a referral fee to someone of $10 for the > tuning. You book both the $75 revenue for the tuning, and the expense of > the $10 referral fee, for a net of $65 income for that transaction. Say you > negotiate $65 fee with a piano dealer. You could either just book the $65 > straight, or book the normal $75, then show a discount of $10, still showing > the same net of $65. The discount would be treated as a reduction of > revenue on your Schedule C, just like an expense. I could make a strong > argument that on your invoice to the piano dealer you would want to show the > whole price of $75, and the discount of $10, totalling down to the net of > $65. That way every time he sees your invoice he has a reminder that you > are cutting him a deal. (Hopefully in exchange for continued steady > business and additional referrals). > > Arlin > > _______________________________________________ > pianotech list info: https://www.moypiano.com/resources/#archives
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