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Self employment tax and incentive payments

 
 
John
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      02-24-2004, 09:52 AM
IRS Pub 3204 says automotive manufacturers' incentive
payments (reported on 1099 MISC) are not subject to SE tax.
Does this only apply to automotive manufacturers' incentive
payments? What about other industries, are their incentive
payments subject to SE tax?? (chemical manufacturers, for
example).

Thank you

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Gene E. Utterback, EA
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      02-25-2004, 04:04 PM
"John" <> wrote:

> IRS Pub 3204 says automotive manufacturers' incentive
> payments (reported on 1099 MISC) are not subject to SE tax.
> Does this only apply to automotive manufacturers' incentive
> payments? What about other industries, are their incentive
> payments subject to SE tax?? (chemical manufacturers, for
> example).


I treat this as one of the interpretative areas; the
important thing to correctly apply the law as it exists.
Remember, IRS Publications are not legally authoritative and
cannot be relied on. I'd look at the underlying code
section and any relevant revenue rulings, and if available
any court cases that address the issue. The big caveat here
is that unless you are a tax professional you need be very
careful in interpreting what you read in an IRS Publication.

That being said, if these really were incentive payments I
wouldn't let the fact they came from a business other than
an auto manufacturer stop me from treating them in a similar
fashion.

Good luck,
Gene E. Utterback, EA

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A.G. Kalman
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      02-25-2004, 04:05 PM
John wrote:

> IRS Pub 3204 says automotive manufacturers' incentive
> payments (reported on 1099 MISC) are not subject to SE tax.
> Does this only apply to automotive manufacturers' incentive
> payments? What about other industries, are their incentive
> payments subject to SE tax?? (chemical manufacturers, for
> example).


It works for all industries as long as it has the same set
of facts as in Pub 3204. Basically, it is a sales incentive
paid by the manufacturer to either a dealer, distributor or
remarketer or a salesperson working for such a firm.

--
Alan
http://taxtopics.net

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