GM 1099-Misc other income

[lab]

I have a client with a 1099-Misc for other income box 3 that was for selling cars. I believe this should go on line 21 but want to confirm there is nothing weird I should know. She didn't actually work for the dealership the cars were sold at but the income was paid to her so she will be claiming it. 

[dkh]

Are you sure this shouldn't be on Sched C subject SE tax?

[lab]

I found a post from someone that answered a tubo tax person and they said line 21. But I just had this little voice in the back of my mind saying I should check. I truly don't know.

[Terry53029]

1099MISC with box 3 for car salesman are prizes they won (their business is selling cars not winning prizes) that is why dealers put amount in box 3. should go on line 21 no se tax

[lab]

@Terry53029 thank you for the confirmation!

[dkh]

But lab says client doesn't work for dealership so why would she win a prize from them

[Terry53029]

Reread Lab's post "client works for a dealer selling cars", the 1099 came from another dealership. the clients dealer could be owned by the dealership that issued the 1099

[lab]

sorry that is the confusing part. I think the ex spouse was diverting some of the income from him. I maybe should have just left that part off. She was a stay at home mom and is now divorced but she was who GM "paid" this money to so she has to claim it.

[dkh]

I read  - client received 1099 for selling cars - client doesn't actually work for the dealership.

[Terry53029]

Was the ex a car salesman?

[lab]

1099 came from GM the manufacturer. Her ex-husband is part of the dealership. It is a family business. They were married at the time.

[dkh]

Did she actually receive this money ?

[lab]

I don't know if he was a salesman or not. I did find pub 3204 that seems to support line 21.

[dkh]

@lab   I agree with Line 21 now that I know she wasn't selling cars as a side business.  

[lab]

She isn't disputing claiming it. I do't know if she actually received the money or not. I didn't ask her that part. She knew she would need to claim it so I didn't want to rock the boat farther. It was a messy divorce.

[lab]

@dkh  Hmmm....do you mean self employed selling cars on the side? I'm just trying to clarify if at some point this would be SE income for future reference.

[Terry53029]

If your client was not in the business of selling cars it should go on line 21. Salesman in my area usually get a W2 and a 1099MISC with an amount in box 3 for prizes. At any rate if a car salesman gets only a 1099, and no W2 it should be put on schedule C, and pay se

[dkh]

@lab  yeah, I wasn't sure what her actual job was other than she didn't work at dealership that gave her the 1099.  She could've been salesperson from another dealership that received commission. Thought there may be some side business selling cars online, from her front yard (lol), or whatever that may require the 1099 to be subject to SE tax.  

[lab]

Thanks guys! I really appreciate it. So you are saying the only time it would be SE is if they are self employed selling cars already. Right? How many more weeks to go?

[lab]

@dkh  and @Terry53029  I can't figure out how to mark you guys as helpful answers. If you know please tell me. Thanks!

[rbynaker · Accepted solution]

It's very common in the auto industry.  They're usually referred to as SPIFFs if you want to google it.

https://www.irs.gov/pub/irs-pdf/p3204.pdf

Rick