1099 forms are for services rendered. I give a 1099 to my polisher,
my caster and any other service that I hire out. I do not give a 1099
to my stone dealer or supply house. These are products. You sell a
product.
If a gallery gave you a 1099 on a consignment piece then you will
ctually be paying more taxes Think of it this way…What if a gallery
wanted to buy the same piece? Would they give you a 1099? No they
would give you a sales receipt. This past year I was in a new gallery
and I received a tax bill from the city for personal property.
There go: Why would I receive a 1099 on selling the same
merchandise? (Straight from my accountant…)
Marilyn
Dallas, TX
www.Marilynohara.com
Hi Alana:
Wholesale, yes, but still income that you would report on your IRS
form and pay tax on?? I would assume a 1099 would record an
expense paid out by the gallery so that they don't have to pay tax
on the amount of money you made.
The gallery should actually not affect income/expense with
consignment type sales. An example: You have a piece consigned to a
gallery and it sells. The accounting entry made at that point would
be: Debit cash (for the total sale) Credit sales (for the commission
on the sale that the gallery keeps) Credit Accounts Payable-Alana
(for the amount of the sale that will be sent to you)
Taxes are so complicated it’s unfair. It’s one reason I changed
careers.
Good Luck in the coming tax season
Kim Starbard
Cove Beads
According to our contract with consigning artists, they own the
work, they can pick it up at any time - without notice if they so
choose. Our CPA told me that we don’t have to send anything to
anyone since we have no sub-contractors, nor employees and no
independent contractors. Isn’t “inventory” something that has
actually been purchsed by the gallery? Oh, and our business is not
a “CORPORATION” perhaps, that should also be taken into account.
We operate as a “sole propriatorship”.
I am afraid that you have completely misconstrued my comments. My
concern was the inadvisablity of giving out ones social security
number, because of the problem of identity theft.. There are other
means of identification one can use that satisfy the IRS.
requirements.
The range of answers to this question show that there is a lot of
confusion about what is really required by the IRS. I believe that
the gallery should not be asking for your SS# and would face no
actual consequences if they stopped filing 1099. But it is unlikely
that you are going to convince the gallery to change their
accounting practices. So the question becomes “Do I want this
account enough to play by their interpretation of the rules?”
Consignment requires a lot more trust than straight out sales. If
you trust them enough to loan them your valuable work untill it
might sell, and trust that they will actually pay you on time when
and if it does sell and trust that if it is lost, damaged or stolen
that you will still get paid and that all their accounting will be
right and none of you sales are misplaced by sloppy book keeping -
why not trust them to keep your SS# secure? I would have a harder
time trusting anyone with the whole consignment arrangement. But
sometimes I do.
Stephen Walker
What if a gallery wanted to buy the same piece? Would they give you
a 1099?
I just got a call from my CPA asking for the Federal ID# for all or
our suppliers that are not incorporated. This is for our remodeling
business. I had to get the numbers for our tile supplier and a lumber
company. I was adamant that these are suppliers (products) and not
subcontractors (service). She said that the IRS is getting tougher on
who gets the 1099 and they want to keep track of as much money
changing hands as possible. It is the first time that I am getting
1099ed from galleries also. Hey, on the bright side, at least I have
had enough sales last year to qualify!
Cande Toner
www.rjtcustom.com/DancingTurtle.htm