Query on reselling hosting: I am in consulting business and sometimes I buy hosting/dedicated server and resold to clients with little or no markup fee. In year 2008 tax return, I found that these monthly services compensation were taxed as my 1099 income. How am I going able to avoid this? I don’t make money out of these monthly services I use it only as a tool to stay closer with my clients.

Example :
I spent 00 for leasing dedicated server each month and receive payment of 00 to cover the cost. Buy end of fiscal year I have a gain of ,200 on paper (00 x 12) but real gain is only 00 (0 x 12). Is there a better way to pay tax gain of 00 only?
What about tax bracket? If these monthly services keep add up am I going to end up paying higher tax bracket where the compensation won’t be enough to cover the cost? Assume leasing server space become 00/month..

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