mwpope Posted January 27, 2009 Report Share Posted January 27, 2009 A client promotes cycle racing and has a professional team ride for him. The team members are treated as independent contractors and need to receive a 1099-Misc with an amount in box 7. If the team member recieved $8,000 in cash and two bicycles with a FMV of $7,000 should box 7 be $15,000? (Based on PUB 15B p 22 General Valuation Rule for fringe benefits) What if the cost to the cycling promoter issuing the 1099 was $4,000? What if the bike was donated by the manufacture because they want the winning team to be on their bikes. I would think it should be the 8K + 4K because those are the expenses on the promoters books. Quote Link to comment Share on other sites More sharing options...
ed_accountant Posted January 28, 2009 Report Share Posted January 28, 2009 If your client did not give the bikes to the cycling team, your client would not issue a 1099 for the bike value. Your client would issue 1099s for the cash paid. The manufacturer of the Bikes would have the responsibility to issue any 1099s for the donated bikes if the manufacturer donated the bikes directly to the team members.... Quote Link to comment Share on other sites More sharing options...
kcjenkins Posted January 28, 2009 Report Share Posted January 28, 2009 Does your client then own the bike, or does the rider own the bike? If your client owns the bike, and merely provides ti to the rider while he rides for the team, then it's not income to the rider. But if it is given to the rider, then I'd report it as income to the rider, at cost. Quote Link to comment Share on other sites More sharing options...
jklcpa Posted January 28, 2009 Report Share Posted January 28, 2009 I don't know about mwpope's client, but it is customary in cycling that the rider gets to keep the bike at the end of the season. A lot of those bikes are sold off after the season, because the riders (at least the lower level ones) could use the extra income, and they see it as compensation. They don't need to keep the bike because they'll be given a new one next year. Quote Link to comment Share on other sites More sharing options...
mwpope Posted January 29, 2009 Author Report Share Posted January 29, 2009 Thank you for all of your responses. The client did purchase the bike and and the one cyclist received cash and a bike as compensation. I did add to the 1099 at cost, the value received for the bike. (Although all the team members ride the same bike they had to buy, at a very good price, their bikes because they sometimes race on their own at other events.) Here's another wrinkle. One rider was let go from the team and he received 15K in cash, but now that he's off the team, refuses to provide his tax ID. We intend to send him a W-9 to request it. What happens if he does not respond in a timely manner prior to the deadline to file the 1096 and 1099-Misc? Do I send him his 1099-misc now without his tax ID so that he is "notified by 1/31" and file the 1096/1099 without a TIN with the IRS? Quote Link to comment Share on other sites More sharing options...
kcjenkins Posted January 29, 2009 Report Share Posted January 29, 2009 Well, I am sure you have already had the talk about "no SSN, no check without 30% withholding", right? So now, if he does not respond to the W-9 in a timely fashion, send him a copy of his 1099 with REFUSED in the box for his SSN. Include a cover letter telling him he has 5 days to send you the number, or it will go to the IRS that way, which is a red flag to the IRS, who can easily find him from his name and address. I bet you get the W-9 back promptly. Quote Link to comment Share on other sites More sharing options...
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