Schedule C vs other income

[Opfor77]

SORRY FOR ALL CAPS....CLIENT HAS A SCHEDULE C SOLE PROPRIETORSHIP AS A PILOT. HE SIGNED ONTO AN AIRLINE CADET TRAINING PROGRAM TO EVENTUALLY BECOME AN EMPLOYEE PILOT OF THE AIRLINE ONCE HE REACHES A CERTAIN NUMBER OF FLIGHT HOURS. AFTER SIGNING ONTO THE CADET PROGRAM, THE AIRLINE GAVE HIM A $7,500 BONUS. HE RECEIVED, FROM THE AIRLINE, A 1099-NEC WITH NONEMPLOYEE COMPENSATION OF $7,500. DOES HE COUNT THAT AS PART OF HIS SCHEDULE C GROSS RECEIPTS, OR DOES HE JUST PUT IT AS OTHER INCOME ON HIS TAX RETURN?

[Skylane]

Sch C income.

its all about building hours for an aspiring pilot… its common for a ‘jump’ or ‘Banner’ operations to pay pilots as ICs requiring sch C. I’d put it all on the same sch c.

[BobKamman]

The airline should have used the 1099-MISC.  He's not performing any services for them.  What if he decides to work for another airline once he has the required hours -- does he have to pay it back?  Probably.  Is his Schedule C going to show $7,500 of non-1099 income, anyway?  I wouldn't make him pay SE tax on it, if that's the result of using Schedule C.  

[Skylane]

Congrats to your client.  Not easy to get into an airline cadet program.  @BobKamman  said "What if he decides to work for another airline ..."    Short answer is the contract the cadet signed.  Cadet programs generally come with a 2 year employment commitment IF the cadet successfully completes the program. and is offered a job. (fwiw, they're entry level regional flying jobs at relatively low pay usually requiring relocation... you don't get to pick your duty station).

Cadet programs have been around for a few of decades. Acceptance into the program is competitive, requires testing and several rounds of interview as well as minimum pilot ratings, hours and, of course, a thorough background check.... 

When an airline does accept a cadet into the program, they have a pretty solid idea about the cadets commitment, determination, and motivation.  The programs have a very high success rate. Some of the money the programs pay the cadet is defray  a portion of the advanced pilot certifications and ratings. An IFR rating can cost >8K.  and ATP rating >5K. ..  

As for the question of 1099-Misc or 1099-NEC,  I'd  defer to the airline legal departments to have researched the appropriate classification. Yes, I'd put it on a schedule C subject to SE. There may be some reasonable expenses incurred but you'd have to read the Cadet contract. The cost of ratings or other training is not deductible. 

[BobKamman]

"Short answer is the contract the cadet signed."

Involuntary servitude went out with the 13th Amendment.  Short answer is that he can't be required to work for them, or for anyone.  The contract can require that he pay the money back if he qualifies for the job but doesn't accept it. 

I don't know that airline legal departments get involved in what 1099 to file.  If this is American Airlines, which offers $7,500 signing bonus to "senior cadets" through its PSA subsidiary, they have their hands full with real issues.   " A December 2025 federal lawsuit filed in San Diego alleges American Airlines (AACA) and partners discriminated against 18 minority cadets (Black, Asian, Latino), claiming "reverse redlining" and unfair, excessive remedial training that forced them to quit, despite initially targeting them for enrollment. The suit alleges fraud and creating a hostile environment."