@TomD8 wrote:
Also, the full amount of the commission is definitely taxable to the real estate agent. The agent cannot deduct the rebate amount unless he/she has paid taxes on the full commission amount.
I don't understand your logic here. Consider two situations.
1. Buyers' agent agrees to a 2% commission on a $100,000 purchase and receives $2000 at the closing.
2. Buyers' agent agrees to a 2% commission on a $100,000 purchase, receives $3000 at the closing and rebates $1000 to the buyer.
In case 1, the agent reports $2000 gross income on schedule C. In case 2, the agent reports $3000 of gross income and $1000 of expenses for net income of $2000. Either way, the agent pays income tax on $2000 of net income.
