Discussion:Cabi Clothing Consultant - Deduction/Inv - Startup Kit?
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Discussion Forum Index --> Tax Questions --> Cabi Clothing Consultant - Deduction/Inv - Startup Kit?
| 6 December 2007 | |
| T/P who is Cabi Clothing consultant required to purchase startup Kit consisting of $2,820 representing:
RE: Item 2 normally T/P shows line and customer order from the Cabi website which accounts for sale, shipping, & taxes and pay T/P resepective commissions. Per T/P end of season, usually have 2 per year, she will sell some of the samples, take some for her personal use, donate perhaps, and holds on to the remaining items. According to her this is just an selling expense...since when do our clients not become experts in accounting/tax? My opinion: This is inventory for resale even though you may not sell them during the season, you are eventually selling some of them at end and those takened for personal are deducted from purchases. As for item 1, these would be treated as selling expenses.
Comments/suggestions? | |
| 6 December 2007 | |
| Why would tangible personal property purchased and placed in service be considered an item purchased for resale?♫ | |
| December 6, 2007 | |
| Sounds like a creative way to try to get $2,820 of clothes....."take some for personal use" = non-deductible. Of course, the client will not agree with this line of thinking. What do you want to bet all the samples are in the clients size? If client truly runs it like a business and actually makes money, I guess I might allow her to write off the "taken for personal use" stuff as advertising.
$320 = selling expenses. Don't forget sales tax. | |
| 6 December 2007 | |
| Why would tangible personal property purchased and placed in service be considered an item purchased for resale?♫ - Because they are selling these items which as BE states will also be charged sales tax....are you saying Dennis this sample line should be expensed? | |
Death&Taxes (talk|edits) said: | 6 December 2007 |
| If you Google Cabi Clothing, you might find the client is in a very competitive market. Here is a fairly good board with pros and cons: http://community.qvc.com/topic/Fashion-Talk/Cabi-Clothing/3000004730& | |
| 6 December 2007 | |
| My point is that these are assets subject to the rules of §168/§179. Sales tax should be paid on purchase. Depreciate or expense. Recapture when taken out of service. | |
| 7 December 2007 | |
| So you are stating this sample line S/B for Ex. Macrs using 7 yr life...and yes T/P indicated SalesTx was included. When you refer to expense I assume you are referring to Sec179 correct? So then when T/P sells some of sample lines at end of season there would be no retail taxable transaction just recording of the recapture for those items disposed of? No recording of these sales on WA Department of Revenue return...just ordinary income on tax return.
Do you Expense, Captialize, or treat the sample line as inventory? Or am I just making this too complicated? How is this an asset when once its 6 months season has passed these sample clothes are no longer used..there is no useful life of more than 1 year or am I missing something here? | |
| December 7, 2007 | |
| I think the bottom line here is: what is the main purpose for which she buys the samples and what is the life cycle of owning a sample? With my clients in the wholesale apparel industry, they buy the samples to show in their showrooms and then at the end of the season, they have a "sample sale" open to the public. The purchases are inventory until sold....not depreciable assets. When the sample sales occur, they are removed from inventory at little to no profit or even at a loss. Sales tax is not collected until the items are sold (or converted to personal use). | |
Death&Taxes (talk|edits) said: | 7 December 2007 |
| I think your original supposition is right, BEG, with the costs to be repaid by an occasional commission on sale and some fun to be had when giving a showing to friends. Of course there just might be some tax write-offs on the journey, including the cost of preparation for this issue. Only those same clients who get in on the ground floor of other products sold this way make the money, no matter the quality of the product, unless she also decides to furnish her house in wicker and rattan, and light it with candles. | |
| 23 March 2008 | |
| Actually, reps do not choose the sizes in their sample line. They range from sizes 0-16. Noone becomes a Consultant for "personal use" or for personal discounts, there aren't any. This is one of the first legit home businesses I have heard of - the reps atcually make a profit - that's rare in MLM "businesses". CAbi Consultants also reserve their samples throughout the Season and the samples are delivered to the Hostess or Guest at 50% off at the end of the Season - they were purchased at 75% off from CAbi. A rep can hold a sample sale if she wishes. Few Consultants have many samples left at the end of the Season. If a Consultant doesn't meet sales minimums, they are not offered a new Contract for the next Season. No other MLM does that. You can't just flounder and lose money Season after Season. CAbi cuts you off before that.
There are tax advantages to being a CAbi Consultant, but CAbi is a buisness, not a way to get your family some good write offs. | |
| 12 November 2008 | |
| I'm curious how a line 179 allows me to not pay taxes on my truck. I would also like to purchase Cabi clothing for a great deal. In my business my company will pay for a car and I can choose to not work for long periods of time and they won't take my business away. | |
