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I receive a loyality payment once a year from a business…

I receive a loyality...

I receive a loyality payment once a year from a business that I used to do business with....they do not report it to the IRS do I pay income tax on it

Accountant's Assistant: The Accountant will know how to help. Please tell me more, so we can help you best.

I used to own a business that worked with a manufacturer that would "put side" a portion of the cost I paid for good into a loyalty account and once our contracted time was up that loyalty fund was returned to me in an annual payment

Accountant's Assistant: When we are ready I'll take you to the appropriate web page.

Ok

Accountant's Assistant: Is there anything else the Accountant should be aware of?

My husband and I file jointly nd both have W2 jobs unrelated to the mentioned question

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Answered in 47 minutes by:
3/17/2018
Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 13,986
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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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, to clients on three continents, since 1986.

I’m reading your question now.

Bear with me a moment while I type up my response.

….

Then if you have further questions we can go from there.

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I'm so sorry, but yes, this is income ... The only time that property received (cash is property) is not taxable is when there is ABSOLUTELY nothing that was given, or will be given, in exchange. (The tax code calls this a gift).

...

Gifts are excluded from income under IRC § 102

...

But again, gifts are considered as gifts ONLY when nothing was ever done to receive them.

...

The seminal case on this is Commissioner vs Duberstein

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In Duberstein:

...

:Berman was president of Mohawk Metal Corporation. Duberstein was president of the Duberstein Iron & Metal Company. They would often talk on the phone and give each other names of potential customers. After receiving some particularly helpful information, Berman decided to give Duberstein a gift of a Cadillac. Although Duberstein said he did not need the car as he already had a Cadillac and an Oldsmobile, he eventually accepted it. Mohawk Metal Corporation later deducted the value of the car as a business expense, but Duberstein did not include the value of the Cadillac in his gross income when he filed his tax return, deeming it a gift. The Commissioner asserted a deficiency for the car’s value against Duberstein. The Tax court affirmed."

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If this has helped, and you DON’T have other questions … I'd appreciate a positive rating (using the stars on your screen, and then clicking “submit")

That’s the only way JustAnswer.com will credit me for the work.

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I hope you’ll rate me based on accuracy and thoroughness, rather than any good news / bad news content

But again, let me know if you need more here,

Lane

Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 13,986
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
Verified
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Lane
Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 13,986
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Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986

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