Deductibility

[Arlin Hall]

Phil, No you don't need to write a check to the dealer on for the
discount.  You just show on your invoice what your regular price
is, your dealer discount, and the net of $65, which is what he
writes you the check for.  On HIS books, the dealer is only going
to show the $65 he gave you.  On your books, gross - discount = net
so you have a better picture of what is going on with your business.
Your paper trail for the IRS (and your accountant) is two fold.  First
is the invoice and check you received for this transaction.  Second is
all of the other charges you have for the year, which should substantiate
that your regular charge is indeed $75.  That way the IRS will not doubt
your numbers.

On the floor tuning thing, I would still write the invoices for your own
records, and also give a copy to the dealer so he knows the value of
services received.  So using the "gross - discount = net"  formula, you
would show:

Tuning	+75
Discount	-75
		----
Amount Due	$ 0
		====

The dealer may chuck it in the garbage can.  His choice.  But then you have
a record of how much of your "time" you are giving you away.  Evaluate that
against what business you are getting from him to decide if its worth it or
not.  I hope that's clear for you.  If you have any questions, anyone, on
this, feel free to call me at 512-801-1583.

Arlin



Phil Bondi Wrote:

Arlin,

some good advice there..I have a question:

Let's say that on an invoice for dealership work, you show $75 for a
regular tuning, and a "Dealer Discount" of $10 for a net of $65.

Do you HAVE to write a check to that dealership in oder to show on your
tax return this rate reduction?

I'm thinking that in order for a tax break to occur, you would need to
have a paper trail showing where the money was going. If that's the
case, then you would need to charge the dealership your full price and
then write them a check for the agreed upon discount.

Also, how would this work for floor tunings, since most dealerships
distain from having to spend money on pianos on the floor.

Thanks for the input.

-Phil Bondi(FL)