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tax question

updated thu 3 mar 05

 

Jeremy/Bonnie Hellman on sat 3 mar 01


Paul,

To answer your question, the auto mileage rate is $.325 (thirty-two and a
half cents) per mile, for 2000. It goes up to $.345 per mile for 2001.
However, you have to make this election (to use the cents per miles rather
than the actual expenses, including depreciation) in the first year you use
the car for business.

My usual explanation for WHY a business doesn't get a deduction for
charitable donations is that 1-you are already taking a deduction on your
business return Schedule C for the value of the materials that went into the
donated pot/s, 2-no one gets a charitable donation for the value of their
time, and it's your time that adds value to the materials that went into the
donated pots/s. It's been discussed several times on clayart, like once a
year. Everyone who learns this is livid, the first time around. Your CPA
is right.

Bonnie

Bonnie Hellman, CPA in PA & CO





>
> Jean,
> This issue was discussed at great length not too long ago on the list,
> but I'm not sure what the heading was for searching the archives.
> But... the bottom line is that your CPA is correct. You can only deduct
> the cost of the materials in the art work that you donate. So if you
> use the cash method of figuring your deductions, which means you deduct
> things when you buy them, you have already deducted the cost of those
> materials. You can't deduct them twice. However, if you use the
> accrual method of accounting, which hardly any artists do, you can
> deduct the materials costs only, when you donate them. Sorry.
> And, as I understand it, you can only deduct donations anyway if you
> itemize your deductions.
>
> Here's another tax question, though. What is the rate this year for
> deducting business mileage on your car? They seem to change it every
> year.
>
> Paul Lewing, Seattle
>
> ______________________________________________________________________________
> Send postings to clayart@lsv.ceramics.org
>
> You may look at the archives for the list or change your subscription
> settings from http://www.ceramics.org/clayart/
>
> Moderator of the list is Mel Jacobson who may be reached at
> melpots@pclink.com.
>

Jean Lutz on sat 3 mar 01


Is it true? You CANNOT deduct anything you give to charity? My CPA is
telling me that anything I make and give to charity directly or for auction
is not deductible.
Jean Lutz

Paul Lewing on sat 3 mar 01


Jean,
This issue was discussed at great length not too long ago on the list,
but I'm not sure what the heading was for searching the archives.
But... the bottom line is that your CPA is correct. You can only deduct
the cost of the materials in the art work that you donate. So if you
use the cash method of figuring your deductions, which means you deduct
things when you buy them, you have already deducted the cost of those
materials. You can't deduct them twice. However, if you use the
accrual method of accounting, which hardly any artists do, you can
deduct the materials costs only, when you donate them. Sorry.
And, as I understand it, you can only deduct donations anyway if you
itemize your deductions.

Here's another tax question, though. What is the rate this year for
deducting business mileage on your car? They seem to change it every
year.

Paul Lewing, Seattle

Wade Blocker on sat 3 mar 01


Your CPA is correct. Since presumably you have already written off the
cost of clay and firing you cannot get another deduction.It seems that
labor does not count for anything. This explanation from my CPA. Mia in ABQ

Jimmy Greene on sun 4 mar 01


You can't....OR can't deduct your pottery donations. It's like this:
(Might be a bit complex, but hang in there with me).

If you maintain an inventory and reflect that inventory as being part of
your "Cost of goods sold," you may take a deduction for your donated art as
an itemized deduction (Schedule A, contributions). However, you must remove
that item from your ending inventory. (You will notice that your Gross
Income income goes UP when the inventory goes DOWN, so there's little
benefit in doing this. You end up getting the deduction, but you ALSO end
up paying more Social Security Tax).[You can think of THAT as being a
subliminal donation to the Soc.Sec. system to help keep it alive, should you
need to use it in twenty-or-so years from now].

If you do not maintain such an inventory, you probably can't take any
deduction.

When you bought your materials, glaze, clay, slip, etc., you probably
claimed a deduction for those purchases. If you did so, you could not claim
a deduction for the donated materials as the deduction has already been
taken when they were purchased! Make sense? Under this situation, if you
DID take a writeoff for the contribution, it would be termed a "Double
deduction."

There are no deductions allowed for the value of your time as an artist (Or
for anything else, for that matter). Therein lies the greatest value in
your work, but it ain't goin' on your tax return.

NOW, if you don't have an operation that you show on your tax return (Called
a Schedule C, Sole proprietorship), and you don't show the expense of your
materials anywhere on your tax return, you MAY take the deduction for the
value of the materials in the piece that you are donating (Whoopee.... five
bucks or so... unless you throw/build B-I-G pots). But THEN, if you're
audited, they'll ask if you DO sell these things, & if you DO, you'll be in
deep poopoo as ALL income from ANY sale technically belongs on your return.

As with the rest of our beloved tax system, there ain't no easy answer to
anything, and if you think there IS, some goof like me can make it long &
confusing.

Bottom line is:

Keep good records,
Take all the deductions you are entitled to,
Pay the Piper at the end of the year, and
Be thankful you have the opportunity to live in this country where the tax
rates are SIGNIFICANTLY lower than the rest of the free world.

KLeSueur@AOL.COM on sun 4 mar 01


In a message dated 3/3/01 6:59:42 PM, jlutz@AZLINK.COM writes:

<< Is it true? You CANNOT deduct anything you give to charity? My CPA is
telling me that anything I make and give to charity directly or for auction
is not deductible. >>

:You can only deduct your materials and you've probably already deducted
them on another line item. One of the things that makes shows requiring a
donation such a drag.

Kathi LeSueur

Carole Fox on thu 3 jan 02


Hi . I'm trying to figure out if I owe sales tax. I have a studio in =
Maryland, where I have done business with one gallery( wholesale =
account). All other sales were made in near-by Delaware where there is =
no sales tax. Does this mean I owe no taxes??=20

This is my first year claiming income from my studio. Does anyone have =
suggestions for resources I can use to find out what obligations I have =
as a business owner?=20

Carole Fox
Silver Fox Pottery
Elkton, MD
cfox@dca.net

Karin Abromaitis on thu 3 jan 02


In Maryland, you can call the State office of sales and use tax. The pho=
ne number is 410.767.1300 or 1.800.492.1751. Basically if you collect th=
e sales tax on the sales of your work, you must pay the sales tax to the =
state. If its wholesale, they collect and pay the sales tax, you don't. =
When you get a sales tax and use number, you're in the system, and they =
will send you the forms you need. Its very easy.
Karin Abromaitis

----- Original Message -----
From: Carole Fox
Sent: Thursday, January 03, 2002 4:20 PM
To: CLAYART@LSV.CERAMICS.ORG
Subject: Tax question

Hi . I'm trying to figure out if I owe sales tax. I have a studio in Mary=
land, where I have done business with one gallery( wholesale account). Al=
l other sales were made in near-by Delaware where there is no sales tax. =
Does this mean I owe no taxes?? =20

This is my first year claiming income from my studio. Does anyone have su=
ggestions for resources I can use to find out what obligations I have as =
a business owner? =20

Carole Fox
Silver Fox Pottery
Elkton, MD
cfox@dca.net

_________________________________________________________________________=
_____
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You may look at the archives for the list or change your subscription
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Moderator of the list is Mel Jacobson who may be reached at melpots@pclin=
k.com.

Bonnie/Jeremy Hellman on sat 30 mar 02


Bruce Girrell has posted 2 web sites that discuss the IRS view of business
vs. hobby. I did a quick reading of both sites and I'd recommend them to
anyone with an interest in this topic, as well as for people looking for
tips on which expenses might be business expenses.

To repeat those sites are:

http://www.iboost.com/manage/business/your_business/40004.htm
http://www.bankrate.com/ndaq/itax/tips/20010403a.asp?prodtype=itax

Neither article is very long, and both looked to me to be written in user
friendly English.

Bonnie
Bonnie D. Hellman, CPA in PA & CO


----- Original Message -----
From: "Bruce Girrell"
To:
Sent: Saturday, March 30, 2002 10:40 AM
Subject: Re: Tax Question


> Althea Vailwrote:
>
> Because I have a full time job (educator) that is not connected to
pottery,
> and my income from my pottery is small compared to the income from
teaching,
> he said the IRS will look at my pottery business as nothing more than a
> hobby.
>
> We're in much the same position. I am a computer programmer and my "day
job"
> certainly supplies most of the income. To make matters worse, we earn
enough
> that claiming a loss from something like a pottery business looks as
though
> I'm looking for ways to cheat on my taxes.
>
> I have talked to our accountant a number of times about this. He tells us
> that the IRS has a number of things that they look at in determining
whether
> something is deemed a hobby or business. I don't remember them all but one
> thing is whether or not the business generates a profit. They assume that
a
> business should be showing a profit in three of five years. If the
business
> does not show a profit, they will consider a pattern of decreasing losses
as
> a sign that you are trying to make a profit. They consider how much you
are
> personally investing in the business. They look to see if you keep records
> in the manner of a business. Are you advertising and doing things that
would
> help incrrease sales? Things like that. Here are some informative sites:
>
> http://www.iboost.com/manage/business/your_business/40004.htm
> http://www.bankrate.com/ndaq/itax/tips/20010403a.asp?prodtype=itax
>
> Good luck.
>
> Bruce "I ain't no accountant, tho" Girrell
>
>
____________________________________________________________________________
__
> Send postings to clayart@lsv.ceramics.org
>
> You may look at the archives for the list or change your subscription
> settings from http://www.ceramics.org/clayart/
>
> Moderator of the list is Mel Jacobson who may be reached at
melpots@pclink.com.
>
>

Gary Ferguson on sat 30 mar 02


I'm not an accountant but I have always done my own taxes.

If your pottery is considered a Hobby you can only deduct expenses up to =
the total of your income (can't declare a loss). If your pottery is a =
Business you can declare all expenses (even exceeding income). =
Basically if you are going through all the motions of a 'real' business =
you should consider your pottery a Business and take all the deductions =
due to you. Probably many you have not thought of even. :)

Gary Ferguson
Clay Artist
www.garyrferguson.com

Althea Vail on sat 30 mar 02


I just returned from having my taxes prepared and am confused about the stand my accountant is taking on my pottery business.  I'm hoping others can clarify some points for me.  Because I have a full time job (educator) that is not connected to pottery, and my income from my pottery is small compared to the income from teaching, he said the IRS will look at my pottery business as nothing more than a hobby. I do claim my expenses at tax time, but my accountant likened the many hours I am in my studio to someone who cooks for a hobby and spends lots of time in the kitchen.  I'm wondering if I need to change accountants.

 

This is my third year declaring my pottery as a business, I'm legit with all of the paperwork  I have my work out on consignment , I do one or two shows a year, I have an Open Studio each year.  I don't have any students or teach in my studio; not ready for that until I retire from teaching.

 

My questions are:  what are the determining factors to determine whether one is engaging in a hobby or building a business?  What have your tax accountants said?   Help.

 

Althea Vail

 


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Eddie Krieger on sat 30 mar 02


I'm essentially doing the same thing you are--I'm working 32 hours/week as a
pharmacist and I have the pottery business on the side. Pharmacy wages
better than my pottery wages at the present by a large margin. I just set up
my pottery business again last year. My accountant had no problem with doing
so. I should show a slight profit this year but I certainly didn't have one
last year.

I thought I would have a huge write off with the add-on I did to my studio.
I spent around 9 thousand and thought I would be able to depreciate it off in
10 yrs or so. Nope--39 year depreciation. No way I'll see that asset
depreciate out. That's depressing.

If you're making a profit or show a good effort to do so, there should be no
problem. That's my opinion and definitely not a professional one.

Eddie Krieger
Dry Creek Pottery
Abilene, Tx

Bruce Girrell on sat 30 mar 02


Althea Vailwrote:

Because I have a full time job (educator) that is not connected to pottery,
and my income from my pottery is small compared to the income from teaching,
he said the IRS will look at my pottery business as nothing more than a
hobby.

We're in much the same position. I am a computer programmer and my "day job"
certainly supplies most of the income. To make matters worse, we earn enough
that claiming a loss from something like a pottery business looks as though
I'm looking for ways to cheat on my taxes.

I have talked to our accountant a number of times about this. He tells us
that the IRS has a number of things that they look at in determining whether
something is deemed a hobby or business. I don't remember them all but one
thing is whether or not the business generates a profit. They assume that a
business should be showing a profit in three of five years. If the business
does not show a profit, they will consider a pattern of decreasing losses as
a sign that you are trying to make a profit. They consider how much you are
personally investing in the business. They look to see if you keep records
in the manner of a business. Are you advertising and doing things that would
help incrrease sales? Things like that. Here are some informative sites:

http://www.iboost.com/manage/business/your_business/40004.htm
http://www.bankrate.com/ndaq/itax/tips/20010403a.asp?prodtype=itax

Good luck.

Bruce "I ain't no accountant, tho" Girrell

Bonnie/Jeremy Hellman on sat 30 mar 02


Althea,=20

Each Schedule C is examined on its own merits whether or not you are a =
business or a hobby.=20

The general test of whether you are a business or a hobby is whether =
you are running the business like a business, with a profit motive. Are =
you doing all those things that businesses do to try to make a profit? =
Think of a large business- they get professional advice, they advertise, =
they don't spend a lot of money frivolously on unnecessary expenses, =
they try "hard" to get sales, increase sales, retain sales. Etc. Etc. In =
other words, to an outside observer do you look like a business?=20

One of the classic tests is whether or not you've turned a profit in 2 =
of the last 5 years. If you've only been in business for 3 years, it =
would be 2 of the last 3 years. It doesn't have to be a large profit, =
but the assumption is that if you were trying to support yourself solely =
from the Schedule C business, after 2 years of loss, you'd probably be =
out of business (and not taking losses in that 3rd year). So if you're =
looking to deduct a loss against your other income after 2 previous =
years of loss, this is when you'd want to examine whether you look like =
a business.=20

My discussion with my tax clients who have more than 2 years of losses =
is whether they are REALLY trying to make a profit in that business. =
What are they doing? Or is this just a fun activity that they get to =
deduct? Do they expect to make a profit this year?=20

When I talk with my clients and they really sound like they're trying to =
turn a profit, but didn't, and are now trying different things to try to =
realize more revenue, we go ahead and deduct the loss. But if the client =
is doing the same old thing year in and year out and not making a =
profit, this looks like a hobby.

Another thought is that in some cases where capital equipment has been =
purchased, you have the option of deducting up to $24,000 in 2001 as =
Section 179 depreciation. You don't have to deduct the entire purchase =
price under code section 179. You could deduct a portion of the cost and =
depreciate the rest. Furthermore, in the last few weeks congress passed =
and the president signed a tax bill that gives you a new 30% bonus =
depreciation, so there is even more flexibility for qualified capital =
assets purchased and placed in service in 2001 and 2002. Therefore, if =
you have purchased capital equipment you have a certain amount of =
control about whether to create or increase a loss in your Schedule C =
business.

In situations where clients with secondary businesses that appear to be =
enjoyable and appear to be hobbies for other people (such as ceramics, =
sculpting, raising orchids) these are open to closer scrutiny. It is =
also been noted that statistically in certain states Schedule Cs are =
more likely to be audited than in other states.

In summary, the difference to the IRS between a business and a hobby is =
the profit motive. Are you engaged in this activity primarily for the =
profit? More importantly, does it look to an outside observer like you =
are engaged in this activity with a profit motive? This will determine =
the tax treatment on the Schedule C.

A business can deduct all ordinary and necessary business expenses, even =
if the "net income" is a "net loss". A hobby can only deduct expenses to =
the extent of income. In other words, you cannot create a net loss if =
you have a hobby. You can use $0 or more as net income on your Schedule =
C.
The classic tax reply to your question is "It depends on the individual =
facts and circumstances." I know this sounds like a cop out, but it's =
really the only reply. When I have clients who are not turning a profit, =
we discuss what they can do to make more money, similar to the =
discussions on clayart. I also want them to do more of the things that =
make them "look" like a business, if they are not already doing those. =
They should have a business bank account, business cards, get =
professional advice (which they are doing if we're talking ), cut =
back on spending if possible.

The IRS requires you to include all income on your Schedule C, but you =
are not required to include your expenses on a Schedule C. When I've had =
clients with hobbies where expenses were greater than income, we only =
used expenses equal to income. We have complied with the law and not =
caused additional taxable income.
Bonnie
Bonnie D. Hellman, CPA in PA & CO
(glued to the computer doing tax returns & reading occasional clayart)
----- Original Message -----=20
From: Althea Vail=20
To: CLAYART@LSV.CERAMICS.ORG=20
Sent: Saturday, March 30, 2002 8:24 AM
Subject: Tax Question


I just returned from having my taxes prepared and am confused about =
the stand my accountant is taking on my pottery business. I'm hoping =
others can clarify some points for me. Because I have a full time job =
(educator) that is not connected to pottery, and my income from my =
pottery is small compared to the income from teaching, he said the IRS =
will look at my pottery business as nothing more than a hobby. I do =
claim my expenses at tax time, but my accountant likened the many hours =
I am in my studio to someone who cooks for a hobby and spends lots of =
time in the kitchen. I'm wondering if I need to change accountants.

This is my third year declaring my pottery as a business, I'm legit =
with all of the paperwork I have my work out on consignment , I do one =
or two shows a year, I have an Open Studio each year. I don't have any =
students or teach in my studio; not ready for that until I retire from =
teaching.

My questions are: what are the determining factors to determine =
whether one is engaging in a hobby or building a business? What have =
your tax accountants said? Help.

Althea Vail



-------------------------------------------------------------------------=
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_________________________________________________________________________=
_____ Send postings to clayart@lsv.ceramics.org You may look at the =
archives for the list or change your subscription settings from =
http://www.ceramics.org/clayart/ Moderator of the list is Mel Jacobson =
who may be reached at melpots@pclink.com.=20

Earl Brunner on sat 30 mar 02


Do you ever show a "profit" on your business? This may be where your
accountant is coming from. You can't take a loss every year or even
more than a certain number of years in a row and still call it a
business. You don't have to make much of a profit, you just can't
always take a loss and write it off.

Althea Vail wrote:

> I just returned from having my taxes prepared and am confused about
> the stand my accountant is taking on my pottery business. I'm hoping
> others can clarify some points for me. Because I have a full time job
> (educator) that is not connected to pottery, and my income from my
> pottery is small compared to the income from teaching, he said the IRS
> will look at my pottery business as nothing more than a hobby. I do
> claim my expenses at tax time, but my accountant likened the many
> hours I am in my studio to someone who cooks for a hobby and spends
> lots of time in the kitchen. I'm wondering if I need to change
> accountants. This is my third year declaring my pottery as a business,
> I'm legit with all of the paperwork I have my work out on consignment
> , I do one or two shows a year, I have an Open Studio each year. I
> don't have any students or teach in my studio; not ready for that
> until I retire from teaching. My questions are: what are the
> determining factors to determine whether one is engaging in a hobby or
> building a business? What have your tax accountants said?
> Help. Althea Vail
>
>
> -----------------------------------------------------------------------
> MSN Photos is the easiest way to share and print your photos: Click
> Here
>
> _____________________________________________________________________________
> Send postings to clayart@lsv.ceramics.org You may look at the archives
> for the list or change your subscription settings from
> http://www.ceramics.org/clayart/ Moderator of the list is Mel Jacobson
> who may be reached at melpots@pclink.com.

--
Earl Brunner
http://coyote.accessnv.com/bruec
mailto:bruec@anv.net

william schran on sat 30 mar 02


Althea - My accountant told me years ago that my pottery business and
my job that pays me money, ceramics educator are closely related and
that I should declare myself as a business, which I have now for who
knows how many years. Whether you are a business in the eyes of the
IRS is a matter of you proving, should they ask, that you are active
in the pursuit of that business - exhibiting, etc.
Bill

Bobbruch1@AOL.COM on sun 31 mar 02


I am not a tax expert and hopefully Bonnie H will respond to William Schran's
post. However, if you are getting a form W-2 from the school where you teach,
I can't see how you can include that income in a Schedule C to match up with
losses from a ceramics studio. However, if you are teaching part-time and
getting a 1099 with no benefits and pension from the school, you might have a
case. JMHO

Bob Bruch

<<<<From: william schran
Subject: Re: Tax Question

Althea - My accountant told me years ago that my pottery business and
my job that pays me money, ceramics educator are closely related and
that I should declare myself as a business, which I have now for who
knows how many years. Whether you are a business in the eyes of the
IRS is a matter of you proving, should they ask, that you are active
in the pursuit of that business - exhibiting, etc.
Bill

william schran on sun 31 mar 02


Bob - You wrote:
"I am not a tax expert and hopefully Bonnie H will respond to William Schran's
post. However, if you are getting a form W-2 from the school where you teach,
I can't see how you can include that income in a Schedule C to match up with
losses from a ceramics studio."

I teach full-time and that income is entered as a salary on my tax
forms. Income from pottery sales, honorariums for judging exhibitions
or lectures and any other income related to my personal business, are
listed on schedule "C". I do not enter any of my salary, reported on
W2 from my full-time teaching on schedule C.
If I teach a class/workshop separate from my salaried teaching
position, I would enter that on my schedule C. Just wanted to make
this clear.
Bill

Bonnie Staffel on sun 31 mar 02


Dear Althea,

My simplified answer to your question. Are you in it to make a profit? My
understanding is that two out of five years should show such a profit. That
is the criteria I was given.

Regards, Bonnie Staffel

iandol on sun 31 mar 02


Dear Althea Vail,

You say <connected to pottery, and my income from my pottery is small compared to =
the income from teaching, he said the IRS will look at my pottery =
business as nothing more than a hobby. I do claim my expenses at tax =
time, but my accountant likened the many hours I am in my studio to =
someone who cooks for a hobby and spends lots of time in the kitchen>>

I am uncertain what your IRS rules are but you if you declare the income =
you should be allowed to claim "legitimate expenses". Your accountant =
will tell you what these are. But you cannot claim wages on an hourly =
basis for the time used to make that income as though you were paying an =
employee. If you do you will have to pay Income Tax. If you do not =
declare the income there are no expenses which can be claimed and it =
then will be classed as a "Hobby or Pastime" Tax reliefs are only =
available on income which is taxed.

Just ask that Accountant to give a fuller explanation before you think =
of changing. You have to quiz them with the right questions to get the =
information which is applicable to your situation.

Best regards,

Ivor.

Longtin, Jeff on tue 2 apr 02


Althea,
Looks like you've gotten several reponses on this already but I'll add my
experience. While improving my mold-making skills I've had to keep "day
jobs". At the same time I've made molds for lots of people. I intend to be a
potter someday. My mold making is just a way to bring in extra money. The
IRS told me if I intend to be a mold-maker someday the mold-making revenue I
generate now could be reported as business income. However, they told me,
since I intend to be a potter someday my mold-making revenue is just hobby
revenue. They never mentioned profit being a part of the equation.
Good Luck
Jeff Longtin

-----Original Message-----
From: Althea Vail [mailto:altheav@HOTMAIL.COM]
Sent: Saturday, March 30, 2002 7:25 AM
To: CLAYART@LSV.CERAMICS.ORG
Subject: Tax Question


I just returned from having my taxes prepared and am confused about the
stand my accountant is taking on my pottery business. I'm hoping others can
clarify some points for me. Because I have a full time job (educator) that
is not connected to pottery, and my income from my pottery is small compared
to the income from teaching, he said the IRS will look at my pottery
business as nothing more than a hobby. I do claim my expenses at tax time,
but my accountant likened the many hours I am in my studio to someone who
cooks for a hobby and spends lots of time in the kitchen. I'm wondering if
I need to change accountants.

This is my third year declaring my pottery as a business, I'm legit with all
of the paperwork I have my work out on consignment , I do one or two shows
a year, I have an Open Studio each year. I don't have any students or teach
in my studio; not ready for that until I retire from teaching.

My questions are: what are the determining factors to determine whether one
is engaging in a hobby or building a business? What have your tax
accountants said? Help.

Althea Vail


_____

MSN Photos is the easiest way to share and print your photos: Click
Here
____________________________________________________________________________
__ Send postings to clayart@lsv.ceramics.org You may look at the archives
for the list or change your subscription settings from
http://www.ceramics.org/clayart/ Moderator of the list is Mel Jacobson who
may be reached at melpots@pclink.com.

Working Potter on wed 3 apr 02


Wear the old ''A potter is...''Tee shirt to the audit,lol.

In a message dated 4/3/2002 8:35:10 PM Eastern Standard Time,
mark.potter@VISIONAGE.NET writes:


>
> Don't be meek here. The IRS is wrong and they know it. They always use these
> scare tactics on self employed people, but if you fight it, you'll win. I
> mean that. Deduct every darned expense associated with making and selling
> those molds!
>
>

Sharon Villines on wed 3 apr 02


> At the same time I've made molds for lots of people. I intend to be a
> potter someday. My mold making is just a way to bring in extra money. The
> IRS told me if I intend to be a mold-maker someday the mold-making revenue I
> generate now could be reported as business income. However, they told me,
> since I intend to be a potter someday my mold-making revenue is just hobby
> revenue.

While this appears to be a correct legal interpretation of the tax law (I'm
not a tax lawyer), it also illustrates the lack of understanding of what
artists do.

Being an artist usually means one has a variety of skills, all of which
relate to one's occupation as an artist. Better to define yourself as an
artist so the umbrella stretches to cover all your income producing
revenues.

If you are a creative person, unless an activity has different tax laws
applied to it (daycare, farming, etc.) it is best to use a broad definition.
Otherwise the tax law could be interpreted to say since your "intention" is
to be a potter, any clay _sculpture_ you sell is hobby income and cannot be
included on a Schedule C.

Sharon.
--
Sharon Villines, Arts Coach
http://www.artscoach.ws
ArtsCoachFAQs is now free!

Julie Milazzo on wed 3 apr 02


I just picked up around twenty different tax
publications, trying to figure out which one(s) may
apply to my business. No luck yet, but I did find some
helpful information for the pottery "hobbiest"
inpublication 535. You can pick it up at any IRS
office. Okay, anyone have a clue about what forms I
need to fill out if I've been setting up a business
since last year, selling stocks to do it, and not be
in business yet? I haven't earned a penny yet, and
expect most purchases to be capital expenses, with
capital gain from the stocks, but severe net loss from
the (not quite existant) business. I own the name,
have an EIN, and bought this particular property for
the business zoning, though I live here. Fun one. I
think I have to fill out a schedule C, along with my
1040. Any other ideas? I'm searching, but the tele tax
help is a condescending uninformative joke, and the
IRS website isn't much help. These publications are
useful, but if anyone just happens to know what I need
to do, I would appreciate the help. Thanks! Jules
--- Sharon Villines wrote:
> > At the same time I've made molds for lots of
> people. I intend to be a
> > potter someday. My mold making is just a way to
> bring in extra money. The
> > IRS told me if I intend to be a mold-maker someday
> the mold-making revenue I
> > generate now could be reported as business income.
> However, they told me,
> > since I intend to be a potter someday my
> mold-making revenue is just hobby
> > revenue.
>
> While this appears to be a correct legal
> interpretation of the tax law (I'm
> not a tax lawyer), it also illustrates the lack of
> understanding of what
> artists do.
>
> Being an artist usually means one has a variety of
> skills, all of which
> relate to one's occupation as an artist. Better to
> define yourself as an
> artist so the umbrella stretches to cover all your
> income producing
> revenues.
>
> If you are a creative person, unless an activity has
> different tax laws
> applied to it (daycare, farming, etc.) it is best to
> use a broad definition.
> Otherwise the tax law could be interpreted to say
> since your "intention" is
> to be a potter, any clay _sculpture_ you sell is
> hobby income and cannot be
> included on a Schedule C.
>
> Sharon.
> --
> Sharon Villines, Arts Coach
> http://www.artscoach.ws
> ArtsCoachFAQs is now free!
>
>
______________________________________________________________________________
> Send postings to clayart@lsv.ceramics.org
>
> You may look at the archives for the list or change
> your subscription
> settings from http://www.ceramics.org/clayart/
>
> Moderator of the list is Mel Jacobson who may be
> reached at melpots@pclink.com.


__________________________________________________
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Mark Potter on wed 3 apr 02


Don't be meek here. The IRS is wrong and they know it. They always use these
scare tactics on self employed people, but if you fight it, you'll win. I
mean that. Deduct every darned expense associated with making and selling
those molds!

-----Original Message-----
From: Ceramic Arts Discussion List [mailto:CLAYART@LSV.CERAMICS.ORG]On
Behalf Of Sharon Villines
Sent: Wednesday, April 03, 2002 9:35 AM
To: CLAYART@LSV.CERAMICS.ORG
Subject: Re: Tax Question


> At the same time I've made molds for lots of people. I intend to be a
> potter someday. My mold making is just a way to bring in extra money. The
> IRS told me if I intend to be a mold-maker someday the mold-making revenue
I
> generate now could be reported as business income. However, they told me,
> since I intend to be a potter someday my mold-making revenue is just hobby
> revenue.

While this appears to be a correct legal interpretation of the tax law (I'm
not a tax lawyer), it also illustrates the lack of understanding of what
artists do.

Being an artist usually means one has a variety of skills, all of which
relate to one's occupation as an artist. Better to define yourself as an
artist so the umbrella stretches to cover all your income producing
revenues.

If you are a creative person, unless an activity has different tax laws
applied to it (daycare, farming, etc.) it is best to use a broad definition.
Otherwise the tax law could be interpreted to say since your "intention" is
to be a potter, any clay _sculpture_ you sell is hobby income and cannot be
included on a Schedule C.

Sharon.
--
Sharon Villines, Arts Coach
http://www.artscoach.ws
ArtsCoachFAQs is now free!

____________________________________________________________________________
__
Send postings to clayart@lsv.ceramics.org

You may look at the archives for the list or change your subscription
settings from http://www.ceramics.org/clayart/

Moderator of the list is Mel Jacobson who may be reached at
melpots@pclink.com.

Bobbruch1@AOL.COM on fri 5 apr 02


Does the term "opened for business" mean that you don't yet have any sales,
or that you are not yet making a profit? It seems as though this post is
saying that you can accumulate expenses only if you haven't started making
any sales ......... is that correct? Also, would you have to be filing a
Schedule C (business income and loss) every year with your tax return in
order for the expenses to qualify for amortization purposes, or is it OK to
just keep a running total waiting for the business to open?

Thanks,

Bob Bruch
<<<<<<From: Olivia T Cavy
Subject: Tax Question - Start Up Costs

<<<happens for US taxpayers with start up expenses for a new business.

<<<expenses but have not yet "opened for business", those expenses are not
deductible. Many of them are accumulated to be amortized over 60 months as
start up costs WHEN the business is finally operational.

<<<money so you don't have to deal with this issue which is discussed under the
IRC code section 195(a). You CAN actually make this election in the year in
which the expenses are paid (for a cash basis taxpayer) but you
can wait until the year the business opens. We're talking about the type of
expenditures that would be deductible IF the business had been operational.
Capital assets are depreciated when they are actually put into service.

Julie Milazzo on fri 5 apr 02


To me, the term "not yet open for business" refers to
the fact that I do not have a business license and am
not teaching, selling, etc. The gallery/studio has not
officially opened. I have an appointment in twenty
minutes at H&R Block, so will be able to tell you more
after that. I'm hoping that some of my expenses can be
deducted from the profit I made selling stocks, but am
willing to bet that most of my expenses will be
considered capital expenses; they'll probably have to
be depreciated. Still, I've spent so much money buying
and refurbishing this place (the interior was almost
entirely cotton candy pink and turquoise when I got
it), landscaping, electrical work, etc., that it's
possible that even with depreciation, I'll still be
okay. I just decided that with all the helpful
accountants on this site, if I'm going to pay any
extra money, I'd rather have it go to an accountant
than the IRS. Jules
--- Bobbruch1@AOL.COM wrote:
> Does the term "opened for business" mean that you
> don't yet have any sales,
> or that you are not yet making a profit? It seems as
> though this post is
> saying that you can accumulate expenses only if you
> haven't started making
> any sales ......... is that correct? Also, would you
> have to be filing a
> Schedule C (business income and loss) every year
> with your tax return in
> order for the expenses to qualify for amortization
> purposes, or is it OK to
> just keep a running total waiting for the business
> to open?
>
> Thanks,
>
> Bob Bruch
> <<<<<<> From: Olivia T Cavy
> Subject: Tax Question - Start Up Costs
>
> <<<> will address what usually
> happens for US taxpayers with start up expenses for
> a new business.
>
> <<<> business and have
> expenses but have not yet "opened for business",
> those expenses are not
> deductible. Many of them are accumulated to be
> amortized over 60 months as
> start up costs WHEN the business is finally
> operational.
>
> <<<> tax year as you spend your
> money so you don't have to deal with this issue
> which is discussed under the
> IRC code section 195(a). You CAN actually make this
> election in the year in
> which the expenses are paid (for a cash basis
> taxpayer) but you
> can wait until the year the business opens. We're
> talking about the type of
> expenditures that would be deductible IF the
> business had been operational.
> Capital assets are depreciated when they are
> actually put into service.
>
>
______________________________________________________________________________
> Send postings to clayart@lsv.ceramics.org
>
> You may look at the archives for the list or change
> your subscription
> settings from http://www.ceramics.org/clayart/
>
> Moderator of the list is Mel Jacobson who may be
> reached at melpots@pclink.com.


__________________________________________________
Do You Yahoo!?
Yahoo! Tax Center - online filing with TurboTax
http://taxes.yahoo.com/

Olivia T Cavy on fri 5 apr 02


Bob,

I don't know of a technical definition of "Open for business" but
generally it means that you are actively seeking sales. You are in a
position to actually deliver whatever it is that you sell. It could mean
that you are taking orders where the product will be delivered in a
timely fashion. It means you already know how to perform the services or
make the product to sell or you have the source to buy the product for
sale, whichever applies.

It's not just appearances. It's whether or not you are really looking to
do business, make sales, fill those orders, whatever terminology you
want. This isn't a tax term. It's common usage. If we were having a
conversation, I'd ask you what you think "open for business" means for a
business person?

Example: My kiln is operational (or I have a place to fire) and I have
clay (or ingredients to make clay and a way of making it) and I'm making
something that I believe is saleable. I already know how to make the
ceramics I'm selling. I am actively seeking customers. I am open for
business.

Example: The restaurant is physically furnished, rehab if any is done,
the kitchen is complete and has passed inspection, licenses are in order,
staff has been hired etc. Often the restaurant will have a "training
meal" where friends are invited to enjoy a meal on the house. This is NOT
open for business. When the doors are open for paying customers, the
restaurant is "open for business."

As a business your goal is to make a profit. Profit is the positive
number that's left after you subtract your expenses from your revenue.
You may not realize that profit, but you should be trying to make a
profit. You should look to an objective outsider like you are trying to
make a profit.

If you have sales revenue, you should have been filing a Schedule C
regardless of whether or not you are a hobby or a business. It's tax
fraud to not declare your income. Period.

Bob it is very clear to me that you really don't understand what I'm
trying to say. Perhaps my explanation isn't clear, but before you act on
what you believe is my advice, I would strongly urge you to consult your
own tax professional. I am concerned that you will misinterpret what I am
saying and claim I advised you to do something I do not think I'm
advising you to do.

Your questions tell me that when I think I'm saying and what you're
hearing are apparently quite different. DO NOT RELY ON MY GENERAL
POSTINGS FOR YOUR OWN TAX SITUATION. It sounds to me that you are
misinterpreting what I'm saying and that makes me very uncomfortable.

Bonnie

Bonnie D. Hellman, CPA in PA & CO

PA work email: oliviatcavy@juno.com
PA home email: mou10man@sgi.net (that's the number 10 in the middle of
the letters)

On Fri, 5 Apr 2002 05:46:00 EST Bobbruch1@AOL.COM writes:
> Does the term "opened for business" mean that you don't yet have any
> sales,
> or that you are not yet making a profit? It seems as though this
> post is
> saying that you can accumulate expenses only if you haven't started
> making
> any sales ......... is that correct? Also, would you have to be
> filing a
> Schedule C (business income and loss) every year with your tax
> return in
> order for the expenses to qualify for amortization purposes, or is
> it OK to
> just keep a running total waiting for the business to open?
>
> Thanks,
>
> Bob Bruch
> <<<<<<> From: Olivia T Cavy
> Subject: Tax Question - Start Up Costs
>
> <<<> usually
> happens for US taxpayers with start up expenses for a new business.
>
> <<<> have
> expenses but have not yet "opened for business", those expenses are
> not
> deductible. Many of them are accumulated to be amortized over 60
> months as
> start up costs WHEN the business is finally operational.
>
> <<<> spend your
> money so you don't have to deal with this issue which is discussed
> under the
> IRC code section 195(a). You CAN actually make this election in the
> year in
> which the expenses are paid (for a cash basis taxpayer) but you
> can wait until the year the business opens. We're talking about the
> type of
> expenditures that would be deductible IF the business had been
> operational.
> Capital assets are depreciated when they are actually put into
> service.
>
>
_________________________________________________________________________
_____
> Send postings to clayart@lsv.ceramics.org
>
> You may look at the archives for the list or change your
> subscription
> settings from http://www.ceramics.org/clayart/
>
> Moderator of the list is Mel Jacobson who may be reached at
> melpots@pclink.com.


________________________________________________________________
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claybair on mon 20 jan 03


Bookkeeping wise, what do I do with checks written to me in 2002 but not
deposited until 2003? Are they income for 2002 or 2003?

Gayle Bair
Bainbridge Island, WA
http://claybair.com

Olivia T Cavy on mon 20 jan 03


If you are a cash basis taxpayer (look at your Schedule C to review what
you're using), then the date of constructive receipt is what governs.
This means the date that you were entitled to keep the money. If I'm a
cash basis taxpayer and do not receive a check until 2003, then it's
income in 2003, not 2002. I'd save the envelope with a December 31st
postmark, just in case of audit. If you received the check in 2002 but
decided not to deposit it in the bank, it is technically 2002 income.

If the payor gives you a 1099, because they paid you in 2002, you can
adjust for this, but it gets more complicated.

If you are an accrual basis taxpayer, you'd be including all income that
you were supposed to receive during the year in which you earned it. If
someone wrote a check to you in 2002, likely you performed the work in
2002, and an accrual basis taxpayer would include this as a receivable in
income in 2002.

Bonnie
Bonnie Hellman, CPA in PA & CO

On Mon, 20 Jan 2003 09:38:48 -0800 claybair writes:
> Bookkeeping wise, what do I do with checks written to me in 2002 but
> not
> deposited until 2003? Are they income for 2002 or 2003?
>
> Gayle Bair
> Bainbridge Island, WA
> http://claybair.com
>
>
_________________________________________________________________________
_____
> Send postings to clayart@lsv.ceramics.org
>
> You may look at the archives for the list or change your
> subscription
> settings from http://www.ceramics.org/clayart/
>
> Moderator of the list is Mel Jacobson who may be reached at
> melpots@pclink.com.
>

Bonnie D. Hellman, CPA
First Capital Corp., Pittsburgh, PA

PA work email: oliviatcavy@juno.com
PA home email: mou10man@sgi.net (that's the number 10 in the middle of
the letters


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J. B. Clauson on tue 21 jan 03


The money is considered income in the year it is received whether you
deposited it or not. If you use the accrual system, it is income when it is
billed.

Jan C.

Marcia Selsor on sat 12 apr 03


Yes. If you have been a teacher forpart of the yearm then this is a
professional exnpenditure. Educational unless you have given a paper.
Marcia
I have been audited three times and have been taught that it ia a lesson
in bookkeeping.

millie carpenter wrote:
> I have sifted thru the archives and since I can't find the answer I
> will post this. Are NECEA dues/conference fee tax deductable if you
> have been a teacher part of the year? We (My husband and I) are having
> a lively discussion about this.
>
> Millie in the sun in Md.
>
> ______________________________________________________________________________
> Send postings to clayart@lsv.ceramics.org
>
> You may look at the archives for the list or change your subscription
> settings from http://www.ceramics.org/clayart/
>
> Moderator of the list is Mel Jacobson who may be reached at
> melpots@pclink.com.
>


--
Tuscany in 2003
http://home.attbi.com/~m.selsor/Tuscany2003.html

Ann Brink on sat 12 apr 03


I don't teach at all, so I suppose I can't deduct anything? I DID learn a
lot- does that count?

Ann Brink, Lompoc CA


----- Original Message -----
From: "Ilene Mahler"
To:
Sent: Saturday, April 12, 2003 4:30 PM
Subject: Re: tax question


> Millie: the dues the hotel room,food and of cause the car rental and the
> plane ticket in the year of the purchase//Ilene
> ----- Original Message -----
> From: "millie carpenter"
> To:
> Sent: Saturday, April 12, 2003 3:51 PM
> Subject: tax question
>
>
> > I have sifted thru the archives and since I can't find the answer I
> > will post this. Are NECEA dues/conference fee tax deductable if you
> > have been a teacher part of the year? We (My husband and I) are having
> > a lively discussion about this.
> >
> > Millie in the sun in Md.
> >
> >
>
____________________________________________________________________________
> __
> > Send postings to clayart@lsv.ceramics.org
> >
> > You may look at the archives for the list or change your subscription
> > settings from http://www.ceramics.org/clayart/
> >
> > Moderator of the list is Mel Jacobson who may be reached at
> melpots@pclink.com.
>
>
____________________________________________________________________________
__
> Send postings to clayart@lsv.ceramics.org
>
> You may look at the archives for the list or change your subscription
> settings from http://www.ceramics.org/clayart/
>
> Moderator of the list is Mel Jacobson who may be reached at
melpots@pclink.com.

Gary Ferguson on sat 12 apr 03


Millie:

I think there is two ways to look at this (remember I am not an tax
accountant, I just play one on-line):

If you are a teacher working for a school (not an independent instructor),
you can deduct the cost of the dues/travel/etc. on schedule A as
unreimbursed business expenses but only as they exceed 2% of your AGI
(Adjust Gross Income).

If you are an independent instructor conducting classes (not on a school
payroll) or have a pottery business you can deduct all the same expenses on
Schedule C and these are NOT subject to the 2% rule. So it is definitely
better if this is the situation.

I believe in both cases (you'll need to check for sure), only 50% of meals
are deductible.

Good luck...the clock is ticking...

Gary Ferguson
Raku Clay Artist
Nampa, ID 83687
Visit my site at http://www.garyrferguson.com
Subscribe to Just Raku Newsletter at http://www.JustRaku.com


----- Original Message -----
From: "millie carpenter"
To:
Sent: Saturday, April 12, 2003 1:51 PM
Subject: tax question


> I have sifted thru the archives and since I can't find the answer I
> will post this. Are NECEA dues/conference fee tax deductable if you
> have been a teacher part of the year? We (My husband and I) are having
> a lively discussion about this.
>
> Millie in the sun in Md.
>
>
____________________________________________________________________________
__
> Send postings to clayart@lsv.ceramics.org
>
> You may look at the archives for the list or change your subscription
> settings from http://www.ceramics.org/clayart/
>
> Moderator of the list is Mel Jacobson who may be reached at
melpots@pclink.com.

millie carpenter on sat 12 apr 03


I have sifted thru the archives and since I can't find the answer I
will post this. Are NECEA dues/conference fee tax deductable if you
have been a teacher part of the year? We (My husband and I) are having
a lively discussion about this.

Millie in the sun in Md.

Ilene Mahler on sat 12 apr 03


Millie: the dues the hotel room,food and of cause the car rental and the
plane ticket in the year of the purchase//Ilene
----- Original Message -----
From: "millie carpenter"
To:
Sent: Saturday, April 12, 2003 3:51 PM
Subject: tax question


> I have sifted thru the archives and since I can't find the answer I
> will post this. Are NECEA dues/conference fee tax deductable if you
> have been a teacher part of the year? We (My husband and I) are having
> a lively discussion about this.
>
> Millie in the sun in Md.
>
>
____________________________________________________________________________
__
> Send postings to clayart@lsv.ceramics.org
>
> You may look at the archives for the list or change your subscription
> settings from http://www.ceramics.org/clayart/
>
> Moderator of the list is Mel Jacobson who may be reached at
melpots@pclink.com.

Mitch Kotula on mon 14 apr 03


Though also not an accountant, but one who has had to
deal with the field and issues...I deduct NCECA and
Potter's Council dues and event expenses as these are
the only two professional organizations in field:
pottery.

Just as you would pay union dues or association
membership fees, NCECA and the Potter's Council are
our equivalents.

On your Schedule C (US tax form) you list your income
from clay, along with your expenses. Expenses include
adverising, materials, travel and entertainment, etc.
Attending NCECA, Potter's Council events and workshops
are professional development activities for me to
maintain and improve skills, as well as to market
myself and my wares.

Also, subscriptions to Ceramics Monthly, Pottery
Making Illustrated, Clay Times, Studio Potter, etc are
business expenses. I keep myself educated, up-to-date
and also can keep up with innovations and vendors that
can help me better my business.

If you are a teacher, or an employee, you can
non-reimbursed business expenses, like NCECA off of
your taxes (US-wise) when you itemize. You, as the
studio potter or sole practitioner, are required to
maintain your competency and be up-to-speed on what is
going on beyond your classroom. The new tax laws (US)
even provide $250 per year in out-of-pocket expenses
for materials and supplies for the classroom.

Read the tax booklets or run through Turbotax.

Mitch


=====
Mitch Kotula
Development Plus
PO Box 2076
Hamilton, MT 59840-4076
406-961-5136 (Home)
406-546-6980 (Cell)

__________________________________________________
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Carole Fox on tue 18 jan 05


I am so behind on reading clayart that as of this morning, I have just made
it into the new year. I guess it's no surprise that I am also behind on my
paperwork!

During my last open studio, I also sold work made by my teenage daughter
(she makes very pretty earrings with tiny origami birds on them). I wrote up
all sales together on my receipt books. How do I account for her sales on my
recordbooks? Should I just treat them as if they were sales of my own
inventory?

Trying to do the right thing...
Carole Fox
Silver Fox Pottery
Elkton, MD
thesilverfox@dol.net

Steve Slatin on tue 18 jan 05


Carole --

Quick questions -- what did you do with the money
received? How old is your daughter? A good rule of
thumb for taxes is to always report what happened as
precisely as possible.

If your daughter received the funds from the sale,
your cash box records should show that, and there's no
income to you -- but she will have income from it.
Her income goes onto her tax return. Depending on her
age there may be 'kiddie tax' considerations (past a
couple grand the gov't. presumes it's effectively your
income and taxes it at your rate).

The best way to make your taxes easy is to report each
transaction exactly as it happened -- if the family
and a friend helped out in a show and you had a long
day and a big tear-down afterwards and everyone was so
tired that you ordered out from a Thai delivery place
to make a party out of it, that was a legitimate
expense of the sale, and a cost to your business. Can
be deducted even on a C-EZ, IIRC.

If you paid your daughter for her work and held it in
a storefront and sold it, then it was inventory, and
has to be accounted for as such. If she gave you the
stuff as a present to you just to see if it'd sell and
you didn't give her anything back than it's pure
profit for you (and shame on you!). If you paid her
so much per hour for making the things, then sold them
as your store's goods, then she's a salaried employee,
etc. etc.

-- Steve Slatin

--- Carole Fox wrote:

> During my last open studio, I also sold work made by
> my teenage daughter
> (she makes very pretty earrings with tiny origami
> birds on them). I wrote up
> all sales together on my receipt books. How do I
> account for her sales on my
> recordbooks? Should I just treat them as if they
> were sales of my own
> inventory?
>
> Trying to do the right thing...
> Carole Fox


=====
Steve Slatin -- No one, having once come to the attention of the authorities, is ever thereafter truly forgotten.



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Jeremy/Bonnie Hellman on tue 18 jan 05


I spoke with Carole on the phone and learned that her daughter is over age
14 (no kiddie tax) and that the earrings are likely to be sold again in the
future, so this wasn't a one-shot deal.

I suggested that she should include the income on her business tax return
(because she was the retailer, and she will remit the sales tax) and pay her
daughter the revenue as her business expense.

The daughter has started her own business and should file a Schedule C.
Unless there are a lot of expenses, this will be a Sch C-EZ.

Carole will have net income of $0 from the earrings, if she gives her
daughter 100% of the revenue so there is no tax impact on her own return.

If the daughter's total net income for the year is less than $430, and she
has virtually no other income from other sources, she will pay no
self-employment tax and no federal income tax. However she will need to file
her own tax return. If the daughter ends up with more net income, she will
pay self-employment tax, but her income tax will be lower than Carole's (and
Carole would have paid self-employment tax as well) so it's still a good
deal tax wise.

The only other approach is for Carole to include the income on her own
Schedule C, where she'd pay more tax. Besides, it really wasn't her revenue.


Bonnie




----- Original Message -----
From: "Carole Fox"
To:
Sent: Tuesday, January 18, 2005 10:11 AM
Subject: tax question


>I am so behind on reading clayart that as of this morning, I have just made
> it into the new year. I guess it's no surprise that I am also behind on my
> paperwork!
>
> During my last open studio, I also sold work made by my teenage daughter
> (she makes very pretty earrings with tiny origami birds on them). I wrote
> up
> all sales together on my receipt books. How do I account for her sales on
> my
> recordbooks? Should I just treat them as if they were sales of my own
> inventory?
>
> Trying to do the right thing...
> Carole Fox
> Silver Fox Pottery
> Elkton, MD
> thesilverfox@dol.net
>
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Carole Fox on wed 19 jan 05


Steve-
Last night Bonnie Hellman graciously invited me to call her and now my plan
is to have my daughter (15 years old) fill out a C-EZ form to report her
income. Since it will be less than $430, she will not have to pay taxes on
that income. And neither will I!

Bonnie and I agreed that it will be good for her to think of her craft as a
business, even at this level. She did get her work juried into the local art
gallery shop and it is carried by The Artful Life, a store in Olympia,
Washington, so maybe it will continue to grow!

Thank you for your advice and please be assured that I gave her every penny
she had coming to her! What kind of a mom do you think I am?! ; )

Hmmm....now I am craving Thai food.
Carole Fox
Silver Fox Pottery
Elkton, MD
thesilverfox@dol.net

----- Original Message -----
From: "Steve Slatin"
Subject: Re: tax question


> Carole --
>
> Quick questions -- what did you do with the money
> received? How old is your daughter? A good rule of
> thumb for taxes is to always report what happened as
> precisely as possible.
>
> If your daughter received the funds from the sale,
> your cash box records should show that, and there's no
> income to you -- but she will have income from it.
> Her income goes onto her tax return. Depending on her
> age there may be 'kiddie tax' considerations (past a
> couple grand the gov't. presumes it's effectively your
> income and taxes it at your rate).
>
> The best way to make your taxes easy is to report each
> transaction exactly as it happened -- if the family
> and a friend helped out in a show and you had a long
> day and a big tear-down afterwards and everyone was so
> tired that you ordered out from a Thai delivery place
> to make a party out of it, that was a legitimate
> expense of the sale, and a cost to your business. Can
> be deducted even on a C-EZ, IIRC.
>
> If you paid your daughter for her work and held it in
> a storefront and sold it, then it was inventory, and
> has to be accounted for as such. If she gave you the
> stuff as a present to you just to see if it'd sell and
> you didn't give her anything back than it's pure
> profit for you (and shame on you!). If you paid her
> so much per hour for making the things, then sold them
> as your store's goods, then she's a salaried employee,
> etc. etc.

Kathi LeSueur on wed 2 mar 05


Bonnie,

My partner and I are setting up a mail-order business for a different
product line. I know this is a long shot.....but, we are going on a
cruise next month for our targeted audience (lesbians). There will be a
Women in Leadership conference on the ship with Carol Mosely Braun,
Billy Jean King, and other big names. We will be talking with people
about our concept, possible products, and taking e-mail addresses.


I have a chiropractor friend who took a cruise to Alaska last year and
deducted it. But, it was a cruise for chiropractors and had work shops
on board specifically for them.

If we manage to get this up and running by the end of the year, is it
possible to deduct any portion of the trip?

Thanks,
kathi