From: Steve Polta (email suppressed)
Date: Mon Jun 23 2008 - 20:52:22 PDT
I am also not a CPA, but Jason is right on here.
One way to avoid those successive years of loss is to simply skip a year. Like you file Schedule C for three years, skip a year (and eat the losses), then get back to it.
Also, anticipating an audit, it is helpful to save documentation that you are *attempting* to make a profit at this activity. Evidence would be grant applications (granted or not), festival entries, documentation of screenings and evidence of having work in for-rent distribution, say with Canyon or FMC.
It's worked for me...
--- On Mon, 6/23/08, Jason Cortlund <email suppressed> wrote:
> From: Jason Cortlund <email suppressed>
> Subject: Re: taxes & film expenses
> To: email suppressed
> Date: Monday, June 23, 2008, 8:13 PM
> I am not a CPA, but here's what I know to be true.
> Yes, Schedule C is exactly what you'd use to write off
> you have to save your receipts throughout the year.
> It's perfectly
> legitimate for artists to write off things like: research
> (any and all movie tickets, video rentals, Broadway shows,
> crappy band
> cover charges, CDs, book and magazine purchases--it all
> goes into the
> subconscious kitty for future reference, you know); travel
> with research/production/performance; 50% of meals
> associated with
> your work; office supplies; shipping and postage; entry
> fees &
> professional services related to your art; and of course
> all things
> like film/video stock; plus more. You can also amortize
> equipment purchases as a depreciating expense over several
> years (you
> shouldn't write off that $5000 laptop or $8000 HD cam
> in one year).
> As far as income goes, yes it does help to have income
> that's directly
> related to your work. But if you get a grant or two or a
> donation, that's income. More important that income is
> profit versus
> loss. You probably don't want to claim massive losses
> due to the
> expenses of your artistic endeavors year after year. The
> general rule
> I've heard is that you need to show some kind of profit
> 3 out of every
> 5 years. It's helpful to know also that just because
> you have
> legitimate expenses doesn't mean you need to claim all
> of them.
> If you claim loss after loss, year after year on your
> Schedule C, then
> you might get audited and the IRS might tell you the
> deductions aren't
> fair, and then they'll call your work a
> "hobby" and not a legitimate
> profession. And then your parents will be validated and it
> all comes
> crashing down. But in the right circumstances, the
> "C" can save you a
> lot of money--fair and square.
> If you're really feel nervous about it, there are some
> CPAs out there
> who offer discounted rates for artists to help them prepare
> returns (if you're a member of any professional artist
> societies or
> collectives, check with their offices--maybe they can put
> you in
> Best of luck,
> Jason Cortlund
> For info on FrameWorks, contact Pip Chodorov at
> <email suppressed>.
For info on FrameWorks, contact Pip Chodorov at <email suppressed>.