sandra nissen on wed 7 jun 00
One other thought on this subject. At the gallery I used to manage in
East TN we were involved in a lot of community service activities.
Silent auctions were a fun and big part of raising $$$ but we felt bad
about continually asking artists to donate their work for these
functions knowing they could get only a fraction of the value for a tax
deduction. It is a little more work for the organisers, but we came up
with the artist would get the wholesale value of their piece and what
ever was raised above that went to the benefit. Everyone benefits and
we no longer felt bad about asking for something for free any longer. I
am now in Atlanta and one of the galleries that represents me faced this
same situation and when I suggested this approach, they were thrilled.
Sandra
Muddy Fingers Clay Studio
5003 Hickory Hills Drive
Woodstock, GA 30188
770 517.7811
ARTISTINSC@AOL.COM on thu 8 jun 00
I can't see who looses in that concept, great idea for those of us who are
continually bombarded with such requests that become a hardship to honor but
on the otherhand might put off future supporters.
Joyce Lee on mon 20 aug 01
Our own resident CPA, and my personal friend,
Bonnie (or Olivia T Cavy... love that!) just pointed out, and I quote:
"the Clayart Fund donations go to
a tax deductible organization, but unless I itemize deductions on my
American tax return, I will get no tax deduction from my donation. There
are other rules (that donations may not exceed a given percent of my
income) that may govern whether or not I get a deduction.
Next time you might want to write that the Clayart Fund is a qualified
tax deductible organization or that donations may be tax deductible,
check with your own tax advisor."
I'm always amazed at the combined knowledge available to claybuds from =
one another. Whatta
concept..... Clayart. Joe and Richard sure started something very =
special.... and Mel and ACers continue it... wonderful to be part of the =
flow....
Joyce
In the Mojave
Steve Slatin on sat 29 dec 07
Mitch -- Always take Bonnie's advice over mine. Steve S
Bonnie Hellman wrote: Mitch,
The IRS has very specific rules regarding depreciation, and the tax code
isn't always intuitive.
Steve Slatin --
History teaches us that there have been but few infringements of personal liberty by the state which have not been justified ...
in the name of righteousness and the public good, and few which
have not been directed ... at politically helpless minorities.
-- Harlan Fiske Stone
---------------------------------
Looking for last minute shopping deals? Find them fast with Yahoo! Search.
Mitch Kotula on sat 29 dec 07
I built a studio this past year and put in landscaping.
How do I deduct the cost of the studio itself? I assume it has a long life of, say 20 years?
Is the landscaping an expense deductable in one lump sum, or over time, like kilns and pug mills?
Anyone else reducing their taxes via such deductions or depreciations.
Mitch
mitchkotula@yahoo.com
Mitch Kotula
Development Plus
PO Box 2076
Hamilton, MT 59840-4076
406-961-5136 (Home)
406-546-6980 (Cell)
---------------------------------
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Steve Slatin on sat 29 dec 07
Mitch --
This gets a little complex, but unless you are
doing your taxes by yourself and by hand,
you don't need to get into all of the details.
If by "built a studio" you mean "bought
lumber and cement and built a building with
my own hands" you've got some interesting
issues not all of which I'm conversant with.
You need to add up the total expense base,
though, and that'll be the 'cost' of the
structure.
If you mean "I hired AAA Construction,
paid them $XXX and they put up a building
on land I already own" that's a slightly
different thing. If you bought the land,
that's separate altogether. This sort
of thing is easy to calculate, either
by hand or with tax calc software.
If you mean "I took a barn, moved some
equipment into it, bought some new
equipment and heavy-upped the power"
that's a third largely different thing.
You'll have to identify the cost of the
barn you already owned as a portion of
the purchase price for the property
previously acquired, and add to it
the cost of permanent improvements.
So let me give you some guidelines --
You generally don't get to depreciate land,
just the building that's on it.
Large equipment purchases can be
depreciated, and though there are some
tricky special rules (like for depreciating
cars, computers, and shelving units)
most equipment falls into the 7-year
depreciation category.
What are called "expensing" rules
are increasingly generous, though, and
you may be able to write off the entire
cost of machinery against income
in the year you purchase it. You may
be able to expense your landscaping,
unless if by 'landscaping' you mean
site engineering for building a structure,
in which case it'll be part of the
base cost of the structure.
The cost of a building that you use for
income-producing activity, though,
including permanent fixtures (lighting,
electrical panel, plumbing, insulation,
painting and so on) is subject to
depreciation. AFAIK, you can't
expense this, and you have to use
the tables for it.
Your booklet might not actually
include the depreciation schedule, the
form 4562, or the instructions for it.
You will need to obtain this (probably
on paper, though it's no doubt already
available on the IRS website) to
calculate the depreciation for a
building used as a studio.
Most non-residential real property
falls into the 39 year recovery
period.
Many people beat their heads in
on the distinction between the
"class life" "classification" and
"recovery period" for various types
of real estate. After the wailing,
gnashing of teeth and utterance
of strong language, non-residential
real property generally just falls
into 39 years. (Exceptions are
gas stations, water treatment fa-
cilities, and some other weird stuff.)
Either TaxCut or TurboTax --
if you buy a version that includes
business schedules -- will do all
of the calculations for you, after
a short series of Q&A's about the
nature of the business.* Over and
over they come up with the 39-year
category.
And you can plug that into the
chart (for year and month of purchase)
and crank out a depreciation amount.
That's off the top of my head, I can be
more specific with more info -- but
if you'll end up with a copy of TurboTax
anyway, just take comfort in the fact
that it's actually pretty easy to operate,
and the Q&A's are fairly good.
-- Steve Slatin
*Tax-Wise does not, as it expects you to already
know how to handle this -- I can't speak to the
other software packages.
Mitch Kotula wrote:
I built a studio this past year and put in landscaping.
How do I deduct the cost of the studio itself? I assume it has a long life of, say 20 years?
Is the landscaping an expense deductable in one lump sum, or over time, like kilns and pug mills?
Anyone else reducing their taxes via such deductions or depreciations.
Mitch
mitchkotula@yahoo.com
Mitch Kotula
Development Plus
PO Box 2076
Hamilton, MT 59840-4076
406-961-5136 (Home)
406-546-6980 (Cell)
---------------------------------
Looking for last minute shopping deals? Find them fast with Yahoo! Search.
______________________________________________________________________________
Clayart members may send postings to: clayart@lsv.ceramics.org
You may look at the archives for the list, post messages, or change your
subscription settings here: http://www.acers.org/cic/clayart/
Moderator of the list is Mel Jacobson who may be reached at melpots2@visi.com
Steve Slatin --
History teaches us that there have been but few infringements of personal liberty by the state which have not been justified ...
in the name of righteousness and the public good, and few which
have not been directed ... at politically helpless minorities.
-- Harlan Fiske Stone
---------------------------------
Looking for last minute shopping deals? Find them fast with Yahoo! Search.
Bonnie Hellman on sat 29 dec 07
Mitch,
The IRS has very specific rules regarding depreciation, and the tax code
isn't always intuitive.
In general a non-residential building or portion of a building is
depreciated over 39 years, pro-rated for the month in which it is placed
into service. Land improvements, including landscaping, for a business
property is depreciated over 15 years. Other business equipment, tools,
vehicles have their own lives, which don't always correspond to the time
that we as potters expect them to function.
Steve Slatin has given you a pretty good summary of how things work
generally.
What he did not address is how things work if the property is sold, which
might or might not be of interest to you.
IMHO as a CPA who earns her living doing tax work and business advisory
services, the answer to your depreciation deduction question is a big "it
depends". You can read the rules, and if you read them correctly, you can
apply them. However there are a number of other issues in a tax return that
may make certain other choices better for your tax situation. If your
business tax return is not the only revenue or expense source on your entire
tax return, it all has to integrate.
For the simple tax returns, I used to think that the consumer products like
Turbo Tax did a creditable job. However in the last few years I've reviewed
prior year returns the new clients prepared using Turbo Tax and the like,
and found mistakes, some of which had to be corrected. The problem is that
if you don't know enough about US taxes to know where you're going, you
can't review your own tax return to see if you've made appropriate choices
and the best choices. In some cases I didn't find outright mistakes as much
as lost opportunities, such as the need to establish certain retirement
plans before year end (Monday, December 31, 2007 for tax year 2007). The
actual contributions don't need to be made until the due date for filing the
tax return, but the plan needs to be in place before January 1st.
Anyway, I'm now enjoying a little creative time before tax season. My first
tax work starts on January 1st when I'm meeting with a client who is going
out of town on the 2nd. Steve's advice to find a CPA whose work includes a
lot of small businesses, preferably potters, and follow that advice.
BTW when you write off the entire cost of equipment under tax code section
179, this is a form of accelerated depreciation. The asset retains its
stated life, so that if it ceases to be business property is less than the
MACRS life, you have to recapture the depreciation pertaining to those years
when it wasn't business property. You are effectively expensing the
equipment, but you're really just accelerating the deduction into the year
you buy the equipment.
And yes, land improvements can qualify for Section 179 depreciation
deduction if other conditions are met.
Bonnie
Bonnie D. Hellman, CPA in CO and PA
Bonnie D. Hellman
Ouray, Colorado 81427
As required by United States Treasury Regulations, you should be aware that
this communication is not intended or written by the sender to be used, and
it cannot be used, by any recipient for the purpose of avoiding penalties
that may be imposed on the recipient under United States federal tax laws.
----- Original Message -----
From: "Mitch Kotula"
To:
Sent: Saturday, December 29, 2007 10:38 AM
Subject: Tax Deductions
>I built a studio this past year and put in landscaping.
>
> How do I deduct the cost of the studio itself? I assume it has a long
> life of, say 20 years?
>
> Is the landscaping an expense deductable in one lump sum, or over time,
> like kilns and pug mills?
>
> Anyone else reducing their taxes via such deductions or depreciations.
>
> Mitch
> mitchkotula@yahoo.com
>
>
>
> Mitch Kotula
> Development Plus
> PO Box 2076
> Hamilton, MT 59840-4076
> 406-961-5136 (Home)
> 406-546-6980 (Cell)
>
> ---------------------------------
> Looking for last minute shopping deals? Find them fast with Yahoo!
> Search.
>
> ______________________________________________________________________________
> Clayart members may send postings to: clayart@lsv.ceramics.org
>
> You may look at the archives for the list, post messages, or change your
> subscription settings here: http://www.acers.org/cic/clayart/
>
> Moderator of the list is Mel Jacobson who may be reached at
> melpots2@visi.com
Michael Wendt on sun 30 dec 07
Mitch,
Bad news,
Until a few years ago, you could
depreciate commercial property
at 10 years. The tax law has now
changed that period to something
in excess of 30 years! ow!
Your best bet is to contact
a qualified tax preparer. I use a
CPA and it costs about $175
a year. He reviews all my data
for math errors, completeness and
is current on tax laws so I can
maximize deductions where they
are justified.
Congratulations on the new studio!
Regards,
Michael Wendt
Wendt Pottery
2729 Clearwater Ave.
Lewiston, Id 83501
U.S.A.
208-746-3724
wendtpot@lewiston.com
http://www.wendtpottery.com
http://UniquePorcelainDesigns.com
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