Tax question on a purchase for a shop

I did a shop where the requirement is you must purchase a phone or tablet. There is the option to return the item or keep it. If there is a requirement of a purchase, how is that written off on your taxes? I know if you buy something in general for your business, there is a write off. But it the purchase is a requirement for a certain shop, is there a difference on how it's taken as a write off?

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Depends, I believe, on whether the MSC reimburses you for the "required purchase".

It also depends on whether the MSC separates reimbursement from fees on your 1099. Some do, some don't.

That's where your personal bookkeeping becomes vital.
If you are required to make a purchase and then allowed the return it, you are not required to keep it. Therefore, you can not deduct the cost if you decide to keep it.

Suppose you accept a $20 shop at the large big-box electronics store. You are required to make a purchase of at least $3 and you are not allowed to return it. It is a flat fee shop without reimbursement. On Schedule C, you report the full $20 as income. The $3 required purchase is reported as a business expense on Schedule C.

Suppose you go to the Multiple Fellows' Burger Joint. There is a $20 (bonused) shop fee and a reimbursement of $14.20. You are required to purchase a burger, fries, and drink and with sales tax, the total cost of the food comes to $15.17. There are two approaches to this, and both have proponents on this Forum. I use method A (below). Others use Method B (below). The net effect is the same.

Method A: Report a total of $34.20 ($20 + $14.20) revenue and business expense of $15.17. Your net revenue is $19.03

Method B: Report $20.00 of revenue and unreimbursed business expense of $0.97. Your net revenue is $19.03
@johnb974 wrote:

There is no reimbursement, only a $50 fee you're paid.

Shopping Southeast Pennsylvania, Delaware above the canal, and southwestern NJ since 2008
@garykung wrote:

Unless you place the tablet for business use, you can't write this off.

!And you can only use it for business! Not watching HBO. Also, the activation fee and the line charge are deductions if used for business if it is that type of tablet. If not you can use the hotspot on the phone. Which I do alot.

Edited 1 time(s). Last edit at 01/13/2022 12:20AM by 2stepps.
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