I'm reaching out to the TurboTax community for advice concerning personal use items/sales in a direct sales business.

[z862605]

I’m reaching out to the TurboTax community for advice concerning personal use items/sales in a direct sales business.

My daughter starting selling LimeLight (skin care) products in September, 2017.

Her 1099-Misc from LimeLight is for $191.  It’s her commissions from sales.  It also included $52 commission on a couple orders for her personal use.

Since there was no profit on her orders; I’m trying to determine where to enter the $52 in TurboTax to reduce her commission to $139; her actual profit (commission) from her sales.

I looked at the Inventory / Cost of Goods Sold section; the problem is I don’t have the gross receipts/sales or the COGS.  I just have her commission information.

Any suggestions are greatly appreciated.

[AmandaR1 · Accepted solution]

Because she earned those commissions, she shouldn't deduct them, even though they were on her personal orders. She can deduct all products she buys to use as demos for parties and/or to sell, under business expenses like supplies, advertising, or miscellaneous (the type of account is based on the business purpose).  

Because her 'product sales' are under $1,000,000, she does not need to use accrual method for her inventory or report Cost of Goods Sold (ie - keeping track of inventory). Instead, she can simply deduct her products, when she buys them, under supplies or miscellaneous expenses.  

What you want to be careful of is not deducting makeup products she purchased , which were used for personal. 

____________

One thing to note, unless she formed a LLC that elected S-corp or she is in a partnership with other members, you wouldn't need TurboTax Business (which is looks like you are using?). Instead, you could just use TurboTax Home and Business (desktop) or TurboTax Self-Employed (online). 

Anyone who starts working for themselves, simply reports business income and expenses on a schedule C with their personal return. Even if she formed a single member LLC, this business defaults to self-employed for taxes (schedule C). 

This makes things much easier than having to file a business return and give herself tax forms from the business to file with personal taxes. 

[z862605]

Thank you; it all make sense now.  Apparently, I selected the wrong version when I submitted my questions.  I am using the Home and Business version.