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A friend regularly buys stuff here (retail) that they can't…

A friend regularly buys...

A friend regularly buys stuff here (retail) that they can't easily get in his home country and sends it to his family and friends, who reimburse him. He pays sales tax when he buys the goods but uses but gets lots of discounts here by using gift cards. So, with those discounts, the amount that he gets reimbursed is higher than the total amount he pays. Is that amount considered profit, and is it taxable?

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3/12/2018
Barbara
Barbara, Enrolled Agent
Category: Tax
Satisfied Customers: 5,766
Experience: 20+ years of experience in tax preparation; 30+ years of experience as a real estate/corporate paralegal.
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Welcome to Just Answer. My name is ***** ***** I will be happy to assist you.

He could be considered as carrying on a business as a sole proprietor.

He has to report the income and file an income tax return if his NET earnings from self-employment were $400 or more. If his net earnings from self-employment were less than $400, he would still have to file an income tax return if he meets any other filing requirement listed in the Form 1040 instructions .

https://www.irs.gov/pub/irs-pdf/i1040gi.pdf

Please let me know if I can assist you further.

Thank you and best regards,

Barb

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Customer reply replied 1 month ago
Thank you Barb. He told me once that if he calculated his hours worked on this effort, it would be far less than minimum wage. Would his own work hours be included in the calculation of net earnings? I’m not sure whether the total amounts to $400 per year.

He wouldn't calculate his hours worked, but if he had had expenses (i.e., shipping, etc.), he could deduct those from his gross income.

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Just following up with you to see if you have any other questions. If so, please let me know so I can continue to assist you.

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Customer reply replied 1 month ago
Thank you, ***** ***** your help. That’s all the questions I have for now.

Thank you for letting me know.

My goal is to provide you with excellent service. Please take a moment to rate my answer with a 5-star rating to let me know that I have achieved my goal.

Barbara
Barbara, Enrolled Agent
Category: Tax
Satisfied Customers: 5,766
Experience: 20+ years of experience in tax preparation; 30+ years of experience as a real estate/corporate paralegal.
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Barbara and 87 other Tax Specialists are ready to help you
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Thank you for the positive rating of my answer. It is very much appreciated.

Have a great day!

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