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This is not a post for those of you who intend to break the law. Trolls and your stupid comments are not appreciated here.

I have been thinking about rakeback, and I think it is not taxable income. I believe it is arguably a purchase price adjustment, much like a mail-in rebate. A discount on goods and services if reasonable and still within the boundaries of fair market value for that good or service is not taxable income.

I am not a CPA, but I did consult a tax attorney on this point. I suggest to those of you that try to comply that you account separately for your rakeback and exclude it. Even if the IRS audits you and calls it income, the argument is reasonable enough to avert penalties in my opinion.

This does not apply to bonuses, which are pretty clearly income IMO.

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Rakeback is often called rake rebate. It has all the characteristics of a rebate. I think you have an argument.

That being said, it's still a risk you're taking. If you get audited, you have to convince a single IRS worker that what you're doing isn't illegal. If that fails, you have a supervisor you can appeal to. [Neither of these people is guaranteed to have a basic grasp of the actual tax code.] If that fails, you're f'd and you're going to tax court.

The problem with that is that you'll be forced to spend a fortune defending yourself.

P.S. Anyone saying the OP's treatment is wrong because it doesn't follow GAPP...please never talk about accounting like you know what you're doing. GAPP has absolutely nothing to do with the tax code.