Where on a schedule C do re-imbursed expenses go? for example, this weekend I put a culvert in for a customer and bought the culvert myself. I'm billing the customer my exact cost of the culvert and making no money from it. Therefor I'm thinking COGS isn't the correct place for this. Where should the income and expense go on Sch. C form?
thanks!
Hi twinnine
I think reimbursements are the repayment to someone who has incurred an expense or cost on behalf of their organisation. So subtlely different here where your reimbursement comes from a customer or client. Anyway, depending on who "owns" the risk will depend on how the transaction is technically treated. And I could go on....
But, this sort of thing happens very regularly and although its not normally treated correctly the most accepted method is to allocate the cost and the subsequent "reimbursement" to the same place where essentially the two transactions off-set. So if you put the reimbursement to Income then the cost should be allocated to Income. If you put the cost to COGS then the Income (reimbursed amount only) should be put to COGS.
I would be interested to hear what other members think...
Good question.
