Neither. Taxes are calculated on taxable income, which is what's left after you've subtracted all expenses and depreciation applicable to your business. If a purchase is required by the guidelines and you are subsequently reimbursed for the purchase, the reimbursement is not taxable because the original expenditure was a shop expense that was required. Your taxable income from your business is calculated on Schedule C and the result is added to your Form 1040.
The best sources of tax information are the website IRS.gov and your tax professional.
Mary Davis Nowell. Based close to Fort Worth. Shopping Interstate 20 east and west, Interstate 35 north and south.
I get that MD's post is right but somehow when you do a grocery shop and you have to spend $25.00 on any grocery items you want (and of course get to consume) and then you are paid $12.00 for the shop and REIMBURSED $25.00 for the groceries and still get to deduct mileage, etc. -- it makes it sound like a pretty good deal . . .
Any company that pays you over $600 in shop fees (not reimbursements) should be sending you a 1099-MISC. However some include the reimbursements in which case you just deduct them on your schedule C as a Business expense.
CPA and willing to answer any questions anyone may have.