Blood money

  • Thread starter Harlan Lunsford
  • Start date

H

Harlan Lunsford

We all know that sales of blood to commercial blood banks represent
taxable income.

Today when a client was talking about his son's tax return, I asked
him, "is this the son who regularly sells his blood?" Yes, BUT "they"
don't give him any receipt or statement of taxable income.

(Of course I told him I would have to actually interview the son in
order to do the tax return, but that's another story.)

One might think that blood banks should issue 1099-misc for the total
paid to each recipient during a tax year. That would sure make it
easier to track and alert IRS to expect tax on the proceeds.

So here's the question posed for your opinion. Do the amounts received
represent payment for services (in which case a 1099misc is clearly
warranted) OR sale of inventory? (grin)

ChEAr$,
Harlan Lunsford, EA n LA
 
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S

Steve Pope

Harlan Lunsford said:
So here's the question posed for your opinion. Do the amounts received
represent payment for services (in which case a 1099misc is clearly
warranted) OR sale of inventory? (grin)
If the latter, what is the basis?

And can you move it into your self-directed IRA and then sell it?

S.
 
G

Gil Faver

Harlan Lunsford said:
We all know that sales of blood to commercial blood banks represent
taxable income.

Today when a client was talking about his son's tax return, I asked him,
"is this the son who regularly sells his blood?" Yes, BUT "they" don't
give him any receipt or statement of taxable income.

(Of course I told him I would have to actually interview the son in order
to do the tax return, but that's another story.)

One might think that blood banks should issue 1099-misc for the total paid
to each recipient during a tax year. That would sure make it easier to
track and alert IRS to expect tax on the proceeds.

So here's the question posed for your opinion. Do the amounts received
represent payment for services (in which case a 1099misc is clearly
warranted) OR sale of inventory? (grin)
should be handled the same way as milk from a cow, no?
 
H

honda.lioness

We all know that sales of blood to commercial blood banks represent
taxable income. snip
Do the amounts received
represent payment for services (in which case a 1099misc is clearly
warranted) OR sale of inventory? (grin)
Is this tongue-in-cheek?

Several others, you and I discussed some of this last year here. If
memory serves, it is illegal to sell blood or plasma. The law views
the money paid to the typical blood/plasma donor as compensation for
time. I do not see how sale of inventory would fly.

(By "typical" here, I mean a person w/o rare blood yada who makes only
a small amount of income from blood donation.)

Also from last year: If this client's son is selling his blood
regularly enough, then a Sch. C might be something to consider.
 
A

Alan

Harlan said:
We all know that sales of blood to commercial blood banks represent
taxable income.

Today when a client was talking about his son's tax return, I asked
him, "is this the son who regularly sells his blood?" Yes, BUT "they"
don't give him any receipt or statement of taxable income.

(Of course I told him I would have to actually interview the son in
order to do the tax return, but that's another story.)

One might think that blood banks should issue 1099-misc for the total
paid to each recipient during a tax year. That would sure make it
easier to track and alert IRS to expect tax on the proceeds.

So here's the question posed for your opinion. Do the amounts received
represent payment for services (in which case a 1099misc is clearly
warranted) OR sale of inventory? (grin)

ChEAr$,
Harlan Lunsford, EA n LA
I know of two appellant cases both of which said it was
irrelevant as to whether the sale of blood was the sale of a
service or a product as in both cases, the income was taxable. No
mention of inventory.

United States v. Garber, 607 F.2d 92 (5th Cir. 1979) (en banc).
Lary v. United States, 787 F.2d 1538 (11th Cir. 1986)
 
H

Harlan Lunsford

Alan said:
I know of two appellant cases both of which said it was irrelevant as to
whether the sale of blood was the sale of a service or a product as in
both cases, the income was taxable. No mention of inventory.

United States v. Garber, 607 F.2d 92 (5th Cir. 1979) (en banc).
Lary v. United States, 787 F.2d 1538 (11th Cir. 1986)
Well, I only mentioned "inventory" (yes, tongue in cheek) because one
fellow maybe 20 or 25 years ago did in fact appeal and try to deduct pro
rata amount of food used to replenish the blood sold.

Who mentioned above it was illegal to sell blood or plasma? Not around
here. In fact the commercial blood suckers advertise on television.

ChEAr$,
Harlan
 
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honda.lioness

Well, I only mentioned "inventory" (yes, tongue in cheek) because one
fellow maybe 20 or 25 years ago did in fact appeal and try to deduct pro
rata amount of food used to replenish the blood sold.

Who mentioned above it was illegal to sell blood or plasma? Not around
here. In fact the commercial blood suckers advertise on television.
If you're really interested (still not sure if this thread is in jest
or not :) ), look back at the discussion held a year ago or you can
maybe google.
 
S

Salmon Egg

Harlan Lunsford said:
We all know that sales of blood to commercial blood banks represent
taxable income.

Today when a client was talking about his son's tax return, I asked
him, "is this the son who regularly sells his blood?" Yes, BUT "they"
don't give him any receipt or statement of taxable income.

(Of course I told him I would have to actually interview the son in
order to do the tax return, but that's another story.)

One might think that blood banks should issue 1099-misc for the total
paid to each recipient during a tax year. That would sure make it
easier to track and alert IRS to expect tax on the proceeds.

So here's the question posed for your opinion. Do the amounts received
represent payment for services (in which case a 1099misc is clearly
warranted) OR sale of inventory? (grin)
I see some problems.

What would be the basis for the transfer of blood? Certainly it takes a
certain amount of nourishment just to produce the blood.

Suppose you give blood to the Red Cross. I presume the value of the
blood is the same as what you can sell it at. Does that mean you can
deduct that value as you would the donation of a painting to an art
museum?

Bill
 
H

Harlan Lunsford

If you're really interested (still not sure if this thread is in jest
or not :) ), look back at the discussion held a year ago or you can
maybe google.
No, it is NOT in jest atall. My real comment was that IRS should
require blood banks to issue 1099's for blood "sales." More income =
more taxes for U S gubmint coffers.
As far as I can see, blood banks are either not required to do so, or
they choose not to do so.

I was not opining one way or another whether such sales might be
construed as regular business activity requiring use of schedule c.

Now do you get it?

ChEAr$,
Harlan Lunsford, EA n LA
 
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honda.lioness

On Mar 3, 4:23 pm, Harlan Lunsford
My real comment was that IRS should
require blood banks to issue 1099's for blood "sales." More income =
more taxes for U S gubmint coffers.
As far as I can see, blood banks are either not required to do so, or
they choose not to do so.
The bottom line of your first post is: "So here's the question posed
for your opinion. Do the amounts received represent payment for
services (in which case a 1099misc is clearly
warranted) OR sale of inventory? (grin)." I did not realize your
point was to urge a change to IRS practices.

Is a 1099-misc "clearly warranted"? Would it help federal revenues to
promote more tax yada regulation of blood donation compensation? I
would be reading up more on non-profits; the additional overhead cost
to blood/plasma collecting orgs for preparing 1099-misc's and how they
would raise the cost charged to hospitals to pay for this who in turn
will raise charges to patients; the income tax bracket of the typical
blood yada seller and so the likely non-effect of raising federal
revenues through stricter regulation of income due to blood donor
sales, and so on.

My big concern last year was helping those who are doing with their
body whatever menial/manual labor they could and so should, if they
donate blood for money regularly and keep records, be allowed to count
it towards the Earned Income Tax Credit, pay SS taxes on the income,
etc.
 

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