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I work for a small company, I am one of the sales people.

Customer Question
Normally we extend credit to...
I work for a small company, I am one of the sales people. Normally we extend credit to some of our customer for some of the deals with close, normally net 30, my boss is allowing me to participate on one of the deals as a partner, I will put some of my own money to purchase the goods together with my boss. I figure to get a 10% return on the deal, I am putting about 20k and getting back 22k, once the customers pay. How and at what rate will I get tax? is it same as income?
JA: The expert will know how to help. Is there anything else the expert should be aware of?
Customer: Nope
Submitted: 3 months ago.Category: Tax
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Answered in 1 minute by:
8/1/2017
Tax Professional: Lane, JD, CFP, MBA, CRPS replied 3 months ago
Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 12,846
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
Verified

Hi. My name's Lane.

...

I hold a law degree (J.D.), with concentration in Tax Law, Estate law & Corporate law, an MBA in finance, a BBA, and CFP & CRPS (Chartered Retirement Plans Specialist) designations, as well - I’ve been providing financial, Social Security/Medicare, estate, corporate, non-profit, and tax advice on three continents since 1986.

Bear with me a moment and I’ll provide my initial response, and then we can go from there if you have further questions on this.

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Tax Professional: Lane, JD, CFP, MBA, CRPS replied 3 months ago

Firts, the easy part. Yes, it's all income.

...

But to know EXACTLY what's going on you need to find out what your actual role is. Is he/she giving you any sort of ownership?

...

Also will you participate in the cost of goods sold (are you actually buying the product and extending credit to get it resold at a profit)? If so, then only the profit and any interest is your income (because the cost of what's being sold is a cost of goods sold - an expense).

...

But if you aren't given this opportunity to participate in the cost and account for the cost as a cost of goods sold, then everything that comes in is income. (an important distinction)

...

I'd need to know more about the "deal," to answer absolutely. If you can get something in writing that would help greatly AND would be a best practice here for you.

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Lane
Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 12,846
12,846 Satisfied Customers
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986

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