Schedule C - loan fees deducted from participant check

[Guest TWoodward]

I have a TPA who is charging two types of loan fees - an annual maintenance fee that is deducted from the participant account each year and a loan set-up fee which is not posted to the participant as a fee, but is included in the loan disbursement and then deducted from the check amount (ie the participant has a loan for $5,000 but only received $4,900 check due to the $100 loan set-up fee). My question is about how these fees should be reported on the new Schedule C for 2009. The TPA has prepared the Schedule C showing only the annual maintenance fees as direct compensation, and not the set-up fees. I am not sure if this is correct or not. On one hand the set-up fees are being distributed from the plan to the TPA and seem like they would be reportable as fees received. On the other hand, the fees are being paid by the participant to the TPA (not that the participant ever sees the money or has a choice). How is anyone else handling this situation? I couldn't find any clear guidance in the IRS instructions or FAQ's. If I missed it please help me out! thanks.