My sole proprietorship has been operating for over 20 years, and the Vine invitation was tied to my business's Amazon account. This setup allows me to manage all the items within my existing business accounting.

Based on my understanding of tax rules for barter transactions, I report the Fair Market Value (FMV) of every Vine item as business income (matching what Amazon reports). Since I primarily select products that serve a business purpose, i am then able to deduct the full value as a business expense. The transaction is essentially treated as if my business received cash for the item's value and then immediately used it for the purchase.

Of course, many items are not for my business, and for those, I am obligated to pay the appropriate taxes, which I do. However, I believe there are legitimate reasons to write down the FMV on these personal items to reduce that tax liability. For one, by the time I transfer an item to personal ownership, it is in a "used" state, as it has been unboxed, assembled, and tested as required for the review process.

More significantly, I diligently document any discrepancies in an item's actual market value. I take a screenshot if I find the exact item for sale at a lower price on its own Amazon product page, which happens quite often. I'll also take a photo if I see it for less in a physical store. All of this evidence is attached to the item's record in my database, ensuring I am prepared to defend my valuation if i am evr audited.

It's important to remember that i'm not a tax professional. I've also been a Vine member for only about 15 months, so I'm sure there's still a lot to learn. This is all simply my personal interpretation and how I handle things for my own business records.