Taxes on spending for Buying Groups

Question 1

In 2025 I purchased 100K of Amazon purchases for a buying group.

Buying Groups essentially ask you to purchase items and usually pay you back full price or below cost). The money made is from cashback and credit card rewards.

What is the process for filling taxes if in total, I spent 100k and got paid back (via ACH during the year) 99k. A loss or 1k.

Question 2

Where in the world are you? In order to answer tax questions we need to know which jurisdisction you are in.

Question 3

Does the platform you used to be reimbursed send out tax forms? Did Amazon think you were a business? Are you prepared to claim the cashback and rewards as income?

Question 4

Are you sure this isn't a scam? Netting maybe 2%-5% (depending on the cash-back/rewards terms)before taxes sounds like a pretty bad deal.

Question 5

Even if it isn't a scam, it seems like a lot of money at risk for not much return. One default can wipe out your profit for the year. If you live in a sales tax state you need to handle that. In California you would need a resellers license, get Amazon not to charge you tax because of it, charge tax to your customers, and send the tax to the FTB.

Question 6

united-states

You didn't tag with location, so I'll assume you're asking about the United States.

If you're running a business in which you purchase items and resell them to someone else, then the cost of purchasing items is called "Cost Of Goods Sold" (COGS), and the proceeds from reselling are called "revenue". You can either track each individual item, or account in bulk. Talk to your accountant on how to do that since it's beyond personal finance scope of this site.

However you're doing it at a loss. Running a business without intent to profit is considered to be ahobby, which then makes it non-deductible. You can only deduct hobby expenses to the extent of hobby income and in your case you have 100K of expenses and only 99K of income. So the 1K loss would then be non-deductible.

Cash-backs reduce the basis of the property, so basically if you spent $100K on purchases and got $2K in cash back then youaccount as if you spent $98K on purchases.

Credit card rewards are similarly rebates, but since they're not cash equivalent it is usually difficult to track down their value. You'd need to track the redemption and account for that in some way, again - talk to your accountant. In the case the purchase is not a deductible expense you wouldn't care about the rebates (cash back or rewards) either, which is the case for most people. But if you intend to deduct the cost of purchase you will need to account for all of those too.

littleadv 195k15 gold badges318 silver badges540 bronze badges · Answer 1 · 2026-02-16 20:04:40Z

united-states

You didn't tag with location, so I'll assume you're asking about the United States.

If you're running a business in which you purchase items and resell them to someone else, then the cost of purchasing items is called "Cost Of Goods Sold" (COGS), and the proceeds from reselling are called "revenue". You can either track each individual item, or account in bulk. Talk to your accountant on how to do that since it's beyond personal finance scope of this site.

However you're doing it at a loss. Running a business without intent to profit is considered to be ahobby, which then makes it non-deductible. You can only deduct hobby expenses to the extent of hobby income and in your case you have 100K of expenses and only 99K of income. So the 1K loss would then be non-deductible.

Cash-backs reduce the basis of the property, so basically if you spent $100K on purchases and got $2K in cash back then youaccount as if you spent $98K on purchases.

Credit card rewards are similarly rebates, but since they're not cash equivalent it is usually difficult to track down their value. You'd need to track the redemption and account for that in some way, again - talk to your accountant. In the case the purchase is not a deductible expense you wouldn't care about the rebates (cash back or rewards) either, which is the case for most people. But if you intend to deduct the cost of purchase you will need to account for all of those too.

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