I received a 1099 Misc from a direct sales company because they automatically provide you with a "commission" check on every purchase made even on self purchases. According to my 1099 Misc, it looks like I earned almost $1000 in 2018. However, I only earned about $150 in outside sales. The rest of the sales were made by me. I purchased inventory in November because I was going to participate in a show where I could make some sales, but the show was cancelled. Now I am stuck with about $2000 worth of inventory that I am not selling. Is there a way to kind of correct this on taxes so I am not paying the extra taxes on what looks like $1000 of self employed income since it actually is not income?
You will have to report the income shown on the 1099-Misc form on your Schedule C. But you can deduct your expenses for inventory, minus the amount you withdrew for personal use, as Cost of Goods Sold, to reduce your gross income. Any additional business expenses you incurred are then subtracted from your gross income to arrive at your net profit or loss. Based on the information you've provided, it would appear your expenses are greater than your income.