Tax Write Off's

[They Live]

"Originally Posted by ChuckS
Chances are that if your spending less than $100K on equipment, with little or no income and have no employees the IRS will regard your business as a hobby.


I think that's a bit extreme... I certainly haven't had a problem with this.

Anyway, if your goal is to deduct against your wife's salary, then you'll need to file jointly and operate as a sole proprietor..."


That's from an old thread: http://www.dvxuser.com/V6/showthread.php?t=57815&page=2&highlight=write-offs

It's the only thread I've found about tax write off's, but it didn't really answer my question.

Where do you draw the line between a business and a hobby? I'm curious if any of you guys out there dropping mega bucks on equipment but not necessarily making a ton of profit on that equipment still write it off on your taxes.

How does this work? Any info would be greatly appreciated.

Are there special write offs for the arts? If you're producing stuff that's screening at festivals, does that help?

[Barry_Green]

It's not where you draw the line, it's where the IRS draws the line.

If you're a corporation, then it's a business.

If you're doing it as a "sole proprietorship", then there's more gray area. Last time I bothered looking at the law on this, it said that you had to be attempting to make a profit, and you had to show a profit something like two or three out of five years. If you failed to meet that criteria you got reclassified as a hobby.

[Max R. Wilson]

start a new business every year... haha

[They Live]

It's not where you draw the line, it's where the IRS draws the line.

If you're a corporation, then it's a business.

If you're doing it as a "sole proprietorship", then there's more gray area. Last time I bothered looking at the law on this, it said that you had to be attempting to make a profit, and you had to show a profit something like two or three out of five years. If you failed to meet that criteria you got reclassified as a hobby.

See, I'm just out of college. My major was Digital Video Producing and Directing. Trust me, I'm trying to make a profit. All of this equipment I buy I look at as an investment. And, although I love it, I don't look at it as a hobby. Now, I'm sure the IRS could care less.

But all that said, if I don't make a profit this year, I can still write it off? And I'm independent right now (no business in my name per se). I mean, I'm waiting tables for money. Do I need to "create a business" in my name?

[griffin]

From what my tax lady told me, if you start a business and deduct things for your taxes, it has to be on there for 3 years and on the third year you must make a profit.