Level 4

How does this multilevel marketing scheme work?

Forum|Forum|4 years ago
March 31, 2022
1 reply
3 views

I need help trying to figure out this multilevel marketing scheme. My client can't possibly be telling me the whole picture and I think I need to understand what she is doing.

She claims she joined Neways as a Life Coach and is purchasing thousands of dollars of product from Modere.

She received a 1099-NEC from Neways for over $10,000 which she says is commission.

She has evidence of purchasing about $9,000 of Modere products which she claims she kept for personal use with a small amount given away as gifts.

I don't think it is possible to get $10,000 in commissions by purchasing $9,000 of products.

She doesn't have a website and claims she doesn't sell anything.

What am I missing from this picture?

This topic has been closed for replies.

qbteachmt

Level 15

"She doesn't have a website and claims she doesn't sell anything."

Well, it's possible to provide coaching and even conferences, and provide products in support of your teachings. This is the part that matters:

"which she claims she kept for personal use"

Then this is not business expense. I can be a Hair Stylist; if I buy $5,000 of shampoo for myself, not for my business activity, then I might have an issue between myself and the sale tax agency, of course, but this is personal use.

"I don't think it is possible to get $10,000 in commissions by purchasing $9,000 of products."

That might or might not be where the money comes from. It can be referrals, or marketing sessions, or? Only she knows.

What she has to know is, she doesn't seem to have many expenses, which is not a problem, either.

Don't yell at us; we're volunteers

C

Chris268Author

Level 4

The problem I am having is that this is an internet business. She does not have a store or store front, but she does not have a website either. She has no mileage expense because she is not traveling to give the gifts or the conferences. She has no shipping expense to send the gifts.

I realize that the product that she purchased is not a business expense.

It is supposed to be multilevel marketing and she wants to all her expenses as marketing. I'm trying to figure out how she got the income.

I suppose you're right, and it doesn't matter. I just have the 1099-NEC.

qbteachmt

Level 15

"this is an internet business. She does not have a store or store front, but she does not have a website either."

Did you mean, she works with clients via remote sessions (phone, screensharing, video)? Me, too. And I don't bother with a website, either. But I do not deal with products.

"She has no mileage expense because she is not traveling to give the gifts or the conferences. She has no shipping expense to send the gifts."

Yes, she told you: Used Personally.

"I realize that the product that she purchased is not a business expense."

Okay.

"It is supposed to be multilevel marketing and she wants to all her expenses as marketing."

All her Expenses will be whatever they are. That doesn't include Personal, though. All her business expenses would be reported as such. Not everything she Spent. That's different.

"I'm trying to figure out how she got the income."

What you should worry about is if there is business income not reported via 1099-NEC. Because a business reports all of the income. Whether there is 1099-NEC reporting or not doesn't preclude the business from reporting everything that happened.

I can work with clients and gross $millions. As long as none of them is a business, or as long as none of those business people pay me $600 or more, there will be no 1099-NEC issued for my work at all.

I still need to report $millions on my business tax return.

She needs some coaching, herself.

Don't yell at us; we're volunteers

Sign up

Login with SSO

Let's get you signed in

Login with SSO

Scanning file for viruses.

This file cannot be downloaded