My question has to do with students working a club event to sell their pottery pieces ...

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Q (cont.) If our student pottery club puts on a sale, and the students can work the event and retain a portion of the sales from their pottery pieces, but the remaining portion goes to the club’s account, is the portion the students receive for the sale of their pottery pieces they made 1099-reportable?  I think the students have an option to “work” the pottery sale or not, but the portion of the sale of their pieces is higher if they participate.

A. Pottery is merchandise. If the students are receiving payment for the sale of their pottery, that is considered merchandise; furthermore, their participation in the sale is voluntary, and the amount of money per piece is not contingent on their being present and providing “sales services.” Therefore, the money earned is not reportable. Regardless of whether they receive the full purchase price or a portion of it, you would not issue a 1099-MISC.

If the school were paying students to work as salespeople and paid them more than $600 in a year, those payments would be reportable – i.e., you would be paying students in exchange for their sales services. But in this club situation, where they are receiving part of the proceeds from the sale of merchandise and they are only volunteering to help promote the merchandise, the proceeds are not reportable.

 

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