A Taxing Question

[Andrew and Rebeca Anderson]

Funny, not so funny how the infernal revenuers look at it 
though.  There is a proper form on which to report gifts to the IRS 
and calculate the tax for them.  The IRS might prefer you treat it as 
a commission for their tax advantage.  Getting a pugnacious 
accountant that is qualified to represent individuals in audits is 
worth it, their fee does come out of what you pay the IRS.  I pay a 
lot less total now then I did before I got one.

It may also be considered a sales commission and subject to a state's 
Sales & Use Tax.  Here in this portion of Texas the rate is 
8.25%.  To back out the tax you would divide 200 by 1.0825 and come 
up with $184.76 as the pre-tax amount with $15.24 as the Sales & Use 
Tax portion for a total the original $200.00.  [Ie add the 
per-centage rate as a decimal to 1 (1+0.0825=1.0825) and divide the 
original by that sum to obtain the pre-tax portion.]

In Texas you have to charge Sales & Use Tax on your tuning 
revenue.  You can back it out like above or tack it on.  I raised my 
rates by switching from backing it out to tacking it on a year ago 
after looking at my total contribution to the State for the previous 
year and looking at my fuel expenditures.  A calculator is a time 
saving tool in my toolkit now.

Andrew Anderson, Artisan Piano

At 05:25 PM 8/3/2007, you wrote:

>Tuned a Steinway M today that did belong to one customer, now 
>belongs to another, who has become a good friend over the years. I 
>had been on the lookout for the right piano for this gentleman for a 
>couple of years and introduced the two people.
>
>After tuning it, he wrote me a check and said "I'm adding $200 to 
>this in appreciation for finding me this great piano."
>
>"Wow," says I, "Thanks". It was a total surprise because I had not 
>asked for or expected any finders or sellers fees and really didn't 
>do much more than make a couple of phone calls.
>
>Question: Is this $200 a gift, or is it a "fee" that I have to 
>report as business income for taxes?
>
>Seems like a grey area to me.
>
>Alan Barnard
>Salem, MO