I got this question from one of our readers:
"Are rebate checks that are received through a growers rewards program from Seed Company for the purchase of seeds taxable as income? I do believe it is but the wholesaler is saying it isn't because you don't get a 1099! "
I tend to get several questions a year that are very similar to this. A client will come in for the year-end tax meeting and ask "I received $xxx of income but did not get a 1099. Do I have to report this as income?" As with most tax questions, the answer is "It Depends". Normally, all business income received by a farmer is taxable, whether you receive a form 1099 or not. In the case of the question from the reader, the answer is "Yes, it is taxable".
Generally, the only time rebate income is non-taxable is if it is a rebate of a personal item that has not been deducted. For example, if you purchase a new TV for home viewing for $1,000 and you mail in a rebate form for $100, the $100 rebate you receive is non-taxable since you did not deduct the purchase of the TV. However, if you had deducted the TV, then the rebate is income, even though it is under the $600 threshold for a form 1099.
The bottom line is any income received on the farm is taxable income whether there is a form 1099 or not. Certain items of taxable income may have other provisions on deferring the income, etc. but in general, income is income.