1099-Misc - Sporadic Activity paid one time by our Church. Should it be on line 21 or Schedule C?

Our Church was turning 50, and they needed to create a brochure. When they quoted an outside company to do it, they were charging around $8k. The marketing director for the Church asked my husband (who had been a non-paid intern at the Church while he was gettting his Master's in Advertising Design last year until June), if he would do the project for $1,500.00. My husband agreed to do it.

This year, we received a 1099-MISC with the $1,500 on box 7. We did not have any real expenses (my husband and I live 5 minutes from the Church, and most comunications were done by email).

This project was a one time event. My husband is working at a company in the advertising / marketing side, but does not own his own business and does not do any freelance work. Our question is, should we do a Schedule C or should we present the income on line 21? I called the IRS to ask them, and they lady who I spoke to told me that I should include the income on line 21 and note on the ... that it is "sporadic activity"; however, a friend who is an accountant told me that it should be on Schedule C.

Please advise. Thank you for all your help!

Kind Regards
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    "This project was a one time event"

    Considering that, and the amount, I would report it on line 21.  I can't see it coming up to the level of a business activity.

    Example - Batok was a retired automobile mechanic.  He assisted a company in installing office windows.  He had never done that type work before.  The work lasted for one month.

    The IRS asserted the income was self-employment income.  They lost in the US Tax Court.  From the decision:

    "Generally, to be engaged in a trade or business, the taxpayer must be involved in the activity with continuity, regularity, and the taxpayer's purpose must be for income or profit. A sporadic activity, hobby, or amusement does not qualify. Commissioner v. Groetzinger [87-1 USTC - 9191], 480 U.S. 23, 35 (1987). The Supreme Court has further stated that whether a taxpayer is engaged in a trade or business is a question of fact. Higgins v. Commissioner [41-1 USTC - 9233], 312 U.S. 212, 217 (1941).

    We believe that petitioner's installation of windows for M. David Paul does not rise to the level of a trade or business. Petitioner's activity, although engaged in for profit, was neither continuous nor regular. Petitioner had never installed windows prior thereto nor at any time thereafter. Rather, petitioner's activity was a "one-time job". Sloan v. Commissioner [Dec. 44,879(M)], T.C. Memo. 1988-294. Accordingly, petitioners are not liable for self-employment tax on the compensation received from M. David Paul."
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      Avoiding Self Employment Tax on a one time gig:
      After entering your 1099-Misc, at the 1099-MISC screen,  on the follow up screens you:
      -Call it money from a side job
      -If he can answer NO to 2008-09, NO to 2011-12, and check NO to regular line of work, he is not subject to self employment tax.  
      TT calls it other income and puts the amount on line 21 of form 1040. As you can see from bwa's answer, this is legal, the key being that it was a one time gig.

      If you have any expenses associated with this gig, they can only be deducted as a misc itemized deduction subject to the 2% of AGI threshold.
      • Another key aspect of what is considered self-employment, however, is the relationship of this "one time event" to the person's profession. If this "one time event" is an activity related to your profession, then the IRS considers it to be self-employment.

        The post indicates this gentleman currently works in advertising and is pursuing an advanced degree in advertising design.  To me that's a red flag, and would seem to indicate that in performing the activity, he's drawing on his professional knowledge and expertise.  The IRS considers that to be self-employment.

        TurboTax handles this situation very well, and will walk you through the entry of the 1099-MISC and also take you through a very brief but sufficient Schedule C interview.
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      TTLarryA  makes a good point, if he cannot answer No to  the  "regular line of work" question, TT will direct him back to schedule C.
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