AboutMike Wellman Expertise I was a former Manager with Price Waterhouse, now PricewaterhouseCoopers, the largest accounting firm in the world. I have had clients in almost every industry and of every size.
I will only answer questions dealing with IRS problems such as delinquent tax returns, Offers in Compromise (Tax Settlement), IRS collection matters including installment agreements, liens, levies, seizures, audits, appeals, innocent spouse claims and injured spouse claims. All other will be referred to the question pool.
Experience Over 25 years experience in taxation specializing in IRS collections, examinations and appeals.
Publications New York Times, Wall Street Journal, Your Money.
Education/Credentials BBA, Baylor University.
Awards and Honors IRSOS.com won the Knowledgeweb award for educational excellence for content.
Expert: Mike Wellman Date: 3/1/2008 Subject: 1099-Misc income
Question I'm trying to help a friend with his tax return and I've never come across this issue. He got a W-2 and a 1099-MISC from his employer. The 1099-MISC has the income (over $7000) in box 3. It is for some pallets that he had acquired and he sold them to his boss. He is not self-employed and he has never used these pallets for a business of any kind. How and where do I report the income. I'm reading that it should go on 1040 under Other Income, but what do I put for the "type" of income?
Someone told me to put the amount on line 21 as "sale of property". If I do this, do i also need to use Schedule D? Also, do i write "sale of personal items" for "type of income" on line 21? Thank you very much!
Answer You could enter it on 4797 but the easiest thing is to put it on line 21 with an offsetting entry on line 21 for the cost. It is not perfect, but it is easy and reports the right numbers. You could argue about whether to put it on Schedule C but if it was a one-time thing and he is not otherwise in the trade or business of selling pallets - line 21 is the way to go.
