Haw. Code R. § 18-237-20-05
Example 7: Taxpayer is in the business of selling machinery and performing warranty work on machinery. The manufacturer (Reimbursing Party) directs the Taxpayer to perform warranty work on customer's machinery. Taxpayer is unable to do such work and has another company (Third Party) perform the warranty work. The Third Party sends an invoice for $100 to Taxpayer and Taxpayer pays the invoice amount. Reimbursing Party pays Taxpayer $100 with no additional monetary consideration. Conclusion: The $100 is a cost or advance.
Example 8: Taxpayer provides warranty work for manufacturer (Reimbursing Party). Taxpayer's employees perform warranty work, including repair services and replacement of parts for the manufacturer; no repair services or replacement of parts are performed by persons other than the employees. Taxpayer's employees receive salaries for performing repair services and replacing parts. Taxpayer bills manufacturer a fee of $1,250 plus $1,000 representing the salaries paid to Taxpayer's employees for services and replaced parts. Conclusion: The $1,000 is not a cost or advance.
Example 9: Taxpayer, an accounting firm, bills its client (Reimbursing Party) $1,000 for professional services plus $100 representing a share of Taxpayer's overhead costs, including supplies, equipment, and computers. Conclusion: The $100 is not a cost or advance.
Example 10: Taxpayer, a law firm, bills its client (Reimbursing Party) $1,000 for professional services plus $100 for copying costs at 10 cents a page. The copies were made on Taxpayer's copying equipment using Taxpayer's employees. Conclusion: The $100 is not a cost or advance.
Haw. Code R. § 18-237-20-05