Emily Henderson on wed 2 apr 97
I know that "artists" are exempt from some capitalization rules of their
inventory. Can anybody enlighten me on how 1. Do I have to provide an
inventory 2. Does it include materials, overhead(rent, utilities,
tools,packaging materials,insurance)...and labor. If it includes labor, how
do I value mine? 3. Does it include an estimate of value of current
finished product on hand at year end closing as well as work in process, if
so, HOW to I estimate that. My accountant in the last 2 years has not
included an inventory. I am worried about a potential problem here. I know
potters here who do not file inventories; we're just too small potatos...any
help TIA Emily in Astoria OR epfizh@pacifier.com
Rick Sherman on fri 11 apr 97
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message----------------------------
I know that "artists" are exempt from some capitalization rules of
their inventory. Can anybody enlighten me on how
1. Do I have to provide an inventory
2. Does it include materials, overhead (rent, utilities,
tools,packaging materials,insurance)...and labor. If it includes
labor, how do I value mine?
3. Does it include an estimate of value of current finished product on
hand at year end closing as well as work in process, if so, HOW to I
estimate that.
My accountant in the last 2 years has not included an inventory. I am
worried about a potential problem here. I know potters here who do
not file inventories; we're just too small potatos...any help TIA
Emily in Astoria OR epfizh@pacifier.com
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Emily: The tax questions can be confusing at the beginning. Once you
get a handle on it, it is fairly simple.
1. Provide an inventory of manufacturing materials on hand based on
your cost.
2. Rent, utilities, packaging materials,insurance, travel costs, show
fees, per diem while traveling (based on a scale of costs per city),
manufacturing materials (including fuel) used, phone, postaged,
printing, etc. have their own categories for entry. The only labor
you can deduct is for those you employ or contract. Your own labor is
not deductable. Sorry.
3. You inventory of stock is valued at manufactur cost and not on the
value you put on it for sale. This is hard to figure. It includes
materials and firing costs. Not much. I don't think the IRS will be
too concerned since it is such a little amount. The things they audit
are: Sales Receipts, travel costs, per diem, phone, unusual office
expenses. At least, from my experience. Good luck. RS
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