This has come across my mind having been in vine about 1.5 years now. I understand and get the tax part to a degree as it counts as income though to me it is more of a sale thing than income. I like the program and see value to it an many ways, but i also get tired of it too. My main dislike is I get item A and try it some time alter item B comes up and is basically the same or better function to item A. I realize there is a 6 month rule on these items need to be kept, ok. The thing that bugs me is i no longer want item A which means throw it out, sell it, or donate it. To me the last would be a great spin on the program and would be a lot simpler for Vine voices than trying to sell it. My dislike then though is this leaves the vine voice paying tax on something (maybe insignificant maybe not). I think a lot of people don't get larger items due to the tax part too. I know there is an option for deductions for things but I think the standard deduction overrides so much it is no help for something like this. I wish there was a way to donate these things to any 501C3 get a receipt from them and then that value is removed from your Vine taxes.
Maybe this is doable now but it don't seem like from what I know. I really wish they would make an update for something like this. I can see many other places it could be used too. Someone wins some item or money but then turns around and donates it seems like same logic to me.
Logical or not the current rules are the income is reported on the Sch C and if you can itemize you can deduct the donations on the Sch A. If you want change lobby your federal congress person.
@Critter-3 wrote:
Logical or not the current rules are the income is reported on the Sch C and if you can itemize you can deduct the donations on the Sch A. If you want change lobby your federal congress person.
Note that you can only take a tax deduction for donated items if you have a cost basis in the items. Your cost basis is the price you paid. If you get items for free, but you pay income tax on the value of the item, then your cost basis is the value that you paid income tax on. (If you get items for free, and don't pay tax on the value, then your cost basis is zero and you are not allowed any tax deduction in most cases.)
And also, if you do donate items and claim a deduction on schedule A, you can only claim the fair market value at the time of the donation. If you keep items for 6 months before donating, then the fair market value is not the price when new, but is whatever you could sell the item for in its present condition (lightly used, etc.) on eBay, Facebook marketplace, or a similar arrangement.
Here's a thought for my expert colleagues.
If the Vine member receives free items but pays income tax on the value/selling price, they have a cost basis in the item. If the business then sold the item, doesn't that create a deductible loss? For example, you get a $500 TV to review, and you get a 1099 and pay income tax on the $500, so you have a $500 cost basis. If the "business" later sells the TV for $250, isn't that a deductible loss? Wouldn't the business show a net profit of $250 instead of $500? Or am I missing something?