Michael Fryd wrote: Think of a hobby as being like a business without a profit motive.
You bring in money, you may deduct your costs. The main difference is that your expenses from the hobby are capped at the income from the hobby.
If your hobby brought in nothing, then nothing is deductible.
Agree
-----------------------------------
But, what I'm really curious is are there "qualified" expenses that are deductable, or is ANYTHING (gas, whatever) related to the hobby an expense?
I believe that only certain "qualified" deductions are itemizable on schedule A for your hobby expenses. (like film, as the CPA used as an example)...that can be itemized as a hobby expense (a "miscellaneous deduction" on schedule A).
For example, I don't think I can buy a new camera for my "hobby" and then deduct the full price of the camera as a miscelaneous deduction on schedule A. (Or can I? )
Or, if I fly to antartica to shoot Penguins for my Hobby, I can deduct the Airfare as a miscellaneous ("hobby") deduction on schedule A?
And food and gas and lodging?
And postcards to send home, etc?
See, I don't believe I get to claim "everything" that a hobby costs as a hobby expense. I believe that there are probably only "qualified" hobby deductions.
Michael Fryd
Posts: 2,786
Miami Beach, Florida, US
ArtisticGlamour wrote: I Agree with all that Michael, but what I'm asking is are there only "qualified" expenses that are deductable, or is ANYTHING related to the hobby an expense? I believe that only certain "qualified" deductions are itemizable on schedule A for your hobby expenses.
For example, I don't think I can buy a new camera for my "hobby" and then deduct the full price of the camera as a miscelaneous deduction on schedule A. Or can I?
So, I don't believe you get to claim "everything" that a hobby costs as a hobby expense.
I believe that there are qualified deductions (like film, as the CPA used as an example)...that can be itemized as a hobby expense (a "miscellaneous deduction" on schedule A).
There are three categories of deductible expenses. Category 2 includes "Expenses that would be allowable if the activity were to be engaged in for profit. For example, rent, labor, wages, travel, transportation, etc. These expenses are limited to the amount of gross income less the expenses in Category 1."
Thus reasonable expenses incurred in the generation of hobby income are deductible.
Keep in mind they are deducted on Schedule A, and thus subject to the same limitations (and phases outs) as other Schedule A deductions.
Disclaimer: I am neither a CPA nor an attorney. This is just my opinion based on a quick read of the IRS publications. This is neither tax advice not legal advice and you should not rely on anything I say. For reliable advice seek a local tax professional or attorney.
There are three categories of deductible expenses. Category 2 includes "Expenses that would be allowable if the activity were to be engaged in for profit. For example, rent, labor, wages, travel, transportation, etc. These expenses are limited to the amount of gross income less the expenses in Category 1."
Thus "reasonable" (subjective term warning! danger! danger!) expenses incurred in the generation of hobby income are deductible.
Keep in mind they are deducted on Schedule A, and thus subject to the same limitations (and phases outs) as other Schedule A deductions.
Disclaimer: I am neither a CPA nor an attorney. This (entire thread) is just my opinion based on a quick read of the IRS publications. This is neither tax advice nor legal advice and you should not rely on anything I say. For (semi-)reliable advice seek a local tax professional or TAX attorney.
Word. +1
Michael Fryd wrote: Keep in mind they are deducted on Schedule A, and thus subject to the same limitations (and phases outs) as other Schedule A deductions.
+1
Hobby deductions...(capped at no more than Hobby income amount)
Deductions for hobby activities are claimed as itemized deductions on Schedule A, Form 1040. These deductions must be taken in the following order and only to the extent stated in each of three categories:
Deductions that a taxpayer may claim for certain personal expenses, such as home mortgage interest and taxes, may be taken in full.
Deductions that don’t result in an adjustment to the basis of property, such as advertising, insurance premiums and wages, may be taken next, to the extent gross income for the activity is more than the deductions from the first category.
Deductions that reduce the basis of property, such as depreciation and amortization, are taken last, but only to the extent gross income for the activity is more than the deductions taken in the first two categories.
GPS Studio Services wrote: This thread is really just repeating itself for the umteenth time.
The good news is that soon it will hit 700 and we can hear from AVD again.
AVD didn't find anything new (or old) worth commenting on.
AVD had an awesome day cross-country skiing in a spring blizzard. First time on skis in 2 years. the skis were waxed either for -15C or +15C. who remembers what they did 2 years ago the last time? clearly not the right wax for the day. But it was an awesome upper body workout. I traded energy with the snow. but the snow told me it wasn't sticking around long enough to be taxed. So no papers were filed. Now I'm heading downtown to drink a few beers and recover all the lost calories and retain my lovely pear shape. don't hit 800 till the weekend is over. I have shoots tomorrow and if I'm pain free in my legs snowboarding on Sunday. I don't feel like checking
GPS Studio Services wrote: This thread is really just repeating itself for the umteenth time.
The good news is that soon it will hit 700 and we can hear from AVD again.
AVD AlphaDuctions wrote: AVD didn't find anything new (or old) worth commenting on.
AVD had an awesome day cross-country skiing in a spring blizzard. First time on skis in 2 years. the skis were waxed either for -15C or +15C. who remembers what they did 2 years ago the last time? clearly not the right wax for the day. But it was an awesome upper body workout. I traded energy with the snow. but the snow told me it wasn't sticking around long enough to be taxed. So no papers were filed. Now I'm heading downtown to drink a few beers and recover all the lost calories and retain my lovely pear shape. don't hit 800 till the weekend is over. I have shoots tomorrow and if I'm pain free in my legs snowboarding on Sunday. I don't feel like checking
AVD AlphaDuctions wrote: AVD didn't find anything new (or old) worth commenting on.
Doesn't matter anyway, Canadian rules (and Logic) don't apply.
We're talking US IRS/congress here...it's not supposed to make sense.
Blame it on Lincoln and the war between the states.
On Aug. 5, 1861, Congress passed the Revenue Act of 1861, a bill considered the origins of the U.S. income tax. Under the bill, incomes over $800 were taxed 3 percent.
Mark my words...we will someday be taxed on air. (if we're not already).
Micheal, I'm not sure a hobbiest photographer can expense the entire shoot's value if the shoot is clearly for the photographer's "personal" collection. The CPA's said only things like film "may" be deductable (in the case of the photographer). For example I don't believe I can deduct all costs for a trip to the desert, and all my equipment, to shoot for my Hobby.
Just as the "professional" photographer can't write off the entire shoot's value if the shoot is clearly for the photographer's "personal" collection.
Say I do plumbing as a hobby...I don't think I can trade plumbing work for professional lawn service at my home...then expense the lawn service.
For a hobby expense to be deductable I believe it has to be a "qualifying deduction" on Schedule A.
ArtisticGlamour wrote: Micheal, I'm not sure a hobbiest photographer can expense the entire shoot's value if the shoot is clearly for the photographer's "personal" collection. The CPA's said only things like film "may" be deductable (in the case of the photographer). For example I don't believe I can deduct all costs for a trip to the desert, and all my equipment, to shoot for my Hobby.
...
Think of a hobby as being like a business without a profit motive.
You bring in money, you may deduct your costs. The main difference is that your expenses from the hobby are capped at the income from the hobby.
If your hobby brought in nothing, then nothing is deductible.
If during the year you sold $1,000 of images and had no expenses, then you had a taxable profit of $1,000.
If during the year you sold $1,000 of images and had $300 in expenses (say gas to get to shoots), then you had a taxable profit of $700.
If during the year you sold $1,000 of images and had $1,000 in expenses, you broke even, and had no taxable profit.
If during the year you sold $1,000 of images and had $1,500 in expenses, you had no taxable profit. As a hobby you don't get any benefit from the $500 loss. It isn't deductible, it can't be used to offset other gains, and it doesn't carry over to future years.
Many people never make any money from their hobby, and hence they cannot deduct any hobby expenses.
If you barter you can't deduct the value of services received or services rendered. At best, you can deduct your actual costs. So if you were a plumber, and you bartered for professional lawn services, the value of the lawn services are not deductible, even if it is for your office lawn.
The above is a gross simplification. Please consult a tax professional for reliable advice specific to your situation.
But, what I'm really curious is are there "qualified" expenses that are deductable, or is ANYTHING (gas, whatever) related to the hobby an expense?
I believe that only certain "qualified" deductions are itemizable on schedule A for your hobby expenses. (like film, as the CPA used as an example)...that can be itemized as a hobby expense (a "miscellaneous deduction" on schedule A).
For example, I don't think I can buy a new camera for my "hobby" and then deduct the full price of the camera as a miscelaneous deduction on schedule A. (Or can I? ) Or, if I fly to antartica to shoot Penguins for my Hobby, I can deduct the Airfare as a miscellaneous ("hobby") deduction on schedule A?
And food and gas and lodging?
And postcards to send home, etc?
See, I don't believe I get to claim "everything" that a hobby costs as a hobby expense.
I believe that there are probably ONLY qualified hobby deductions.
If something is used only for generating income, it can be written off.
If the sole purpose of flying to antarctica is to create photos to sell, then yes. Food has specific rules depending on the process you follow.
Lodging yes.
Gas from the lodging to the penguins and back, yes. Gas from lodging to the bar at night when you're not working, no.
Postcards to send home, no. Postcards to send to clients yes.
MC Photo wrote: If something is used only for generating income, it can be written off.
If the sole purpose of flying to antarctica is to create photos to sell, then yes. Food has specific rules depending on the process you follow. Lodging yes. Gas from the lodging to the penguins and back, yes. Gas from lodging to the bar at night when you're not working, no. Postcards to send home, no. Postcards to send to clients yes.
I really do need to learn to take more advantage of those opportunities.
Michael Lohr wrote: Yes, once you understand how all deductions work then you will finally realise why you have a specious argument.
Well, I'm not saying you are wrong. Just 2 CPA's, a tax attorney, and what I read from the tax code say you are. Seems you are misinformed.
I do wonder how your CPA advises you that it's okay to take a depreciation deduction on your studio and equipment and then use it for "non-commercial" personal shoots. I'm not saying it's not done all the time...I just wonder how your CPA reconciles it. But WTF do I know...I'm just a hobby shooter. (who only shoots unpaid "test" shoots).
And I got answers I trust, in spite of your noise and confusion.
Cheers!
Michael Lohr wrote: Barter came up in the course of the interview almost immediately after the preview interview. They were trying to determine my sources of revenue. I have never had this topic come up in other audits, so at first I was a touch paranoid on why it was being brought up here.
~
My first question was just testing the waters. Essentially it was, Is testing between a model and photographer considered Barter? Answer No.
I find it interesting that you were a "touch paranoid" about it, and were "testing the waters"...if you were so confident.
I gave the example of a photographer shoot family portraits in exchange for dental work. He agreed that would be a barter situation.
Please explain what exactly makes the model's services worth nothing in your example, but the dentist's services are worth something? (According to your theory).
Yes. The concept of the shoot is mine. In this case it is entirely MY shoot. I contacted her for services, and I am paying her to show up and model (a service she provides) by providing images in payment for that service. In this case she is a lump of "modelling clay" that I am paying to show up and model MY idea.
IF it was a "collaboration", I would agree that it's a barter...but in this case it's NOT. I am paying the model to show up for MY shoot.
Then wouldn't she also be paying you to stand there and model YOUR shoot? I mean, you can't do it without her. Thus, it's really a trade. Saying it's YOURS and that you are paying her with YOUR time devalues her efforts. It also makes her seem worthless, when in reality you're saying she doesn't need you at all but you need her.
hmm
Then wouldn't she also be paying you to stand there and model YOUR shoot? I mean, you can't do it without her. Thus, it's really a trade. Saying it's YOURS and that you are paying her with YOUR time devalues her efforts. It also makes her seem worthless, when in reality you're saying she doesn't need you at all but you need her.
hmm
it took almost 700 posts for someone to finally say out loud (or at least imply) that this whole 'pay her in images' is just a way to feel all grown up??????
AVD AlphaDuctions wrote: it took almost 700 posts for someone to finally say out loud (or at least imply) that this whole 'pay her in images' is just a way to feel all grown up??????
Yeah, I come to the "fantasyland" of Model Mayhem to feel "all grown up". LOL!
Don't get me wrong, I love Mayhem...but I sure don't come here to feel grown up.
As your posts usually show...people get overly emotional, hyper-critical, and personally insulting about simple questions (they don't like). It's comical to me.
Because I don't give a shit (unless you've proven credible).
For example:
Don't "pay" a model her "agreed upon images" and see just how pissed she gets.
Thread after thread complaining about lack of "image payment" in the model section.
Not to mention all the "DO I pay her in RAW images?" threads here.
As a real "grown up" I want to make sure to do it "right"...and part of that is building in CYA, and reducing risk.
There's just too many "sue-happy" attorneys in the world, and frivolous lawsuits and such. I'm sure you know what I mean. Reducing personal risk and liability is a good thing...unless you are an attorney that makes money from other's troubles...then hell, you might downplay risk, or even encourage it.
I'm sure you know what I mean.
Amanda Jackson Photo wrote: Then wouldn't she also be paying you to stand there and model YOUR shoot? I mean, you can't do it without her. Thus, it's really a trade. Saying it's YOURS and that you are paying her with YOUR time devalues her efforts. It also makes her seem worthless, when in reality you're saying she doesn't need you at all but you need her.
hmm
No, IF the shoot is structured the way I said it was...then I am paying for "modelling service" NOT a trade shoot. It's not a collaboration.
It does not make her worthless, it makes her a paid contractor...just as if I paid in cash (except I paid in images, not time).
It is MY concept and my shoot, and I am "hiring her" with payment in images. She is not worthless, she is a hired model providing a valuable service, which I pay for.
IF there was "collaboration" then I agree...it's a TRADE shoot of EQUAL services.
ArtisticGlamour wrote: Ask most folks (on Mayhem) if they work for "free" and they get all offended, and make a point to tell you that it's not "free" that it's a "fair trade" of valuable services (ie: a barter)...until this tax question comes up.
Then all of a sudden it's a non-commercial "hobby" and everyone is working on so-called "free" and "educational" shoots again. It's Comical.
Michael Lohr wrote: Yes, once you understand how all deductions work then you will finally realise why you have a specious argument.
I do wonder how your CPA advises you that it's okay to take a depreciation deduction on your studio and equipment and then use it for "non-commercial" personal shoots. I'm not saying it's not done all the time...I just wonder how your CPA reconciles it. But WTF do I know...I'm just a hobby shooter. (who only shoots unpaid "test" shoots).
Read the entire code of IRS deductions.
As a commercial photographer I do not have to seperate my work that wont make me money from work that will.
I can pretty much write off anything related to my craft. We are allowed to practice and try new ideas. We are allowed to learn new things and in the process we can write off the expenses for that learning
I would never, ever go into a new job with out all the kinks worked out.
This isn't limited to our field. For example a doctor could fly somewhere to a seminar related to his field. Even though he isn't making money he can still write off the cost.
Michael Lohr wrote: Barter came up in the course of the interview almost immediately after the preview interview. They were trying to determine my sources of revenue. I have never had this topic come up in other audits, so at first I was a touch paranoid on why it was being brought up here.
~
My first question was just testing the waters. Essentially it was, Is testing between a model and photographer considered Barter? Answer No.
I find it interesting that you were a "touch paranoid" about it, and were "testing the waters"...if you were so confident.
The issue of barter came up independent of my questions. I have been audited a few times before and it was never mentioned before. The irony wasn't lost on me.
Please explain what exactly makes the model's services worth nothing in your example, but the dentist's services are worth something? (According to your theory).
As you have already acknowledge you already dismiss everything I say, so I won't waste my time on you. I am speaking to anyone else that may stumble on this thread and will hopefully provide enough information for them to make an informed decision.
Michael Lohr wrote: As you have already acknowledge you already dismiss everything I say, so I won't waste my time on you. I am speaking to anyone else that may stumble on this thread and will hopefully provide enough information for them to make an informed decision.
You mean a mis-informed decision. I dismiss you as inaccurate and mis-informed, but I will still call bullshit. As mentioned, you have been told you are wrong by two CPA's and a Tax Lawyer, just on this thread.
Your "facts" don't add up...in fact you don't quote or link any facts, you just continue to muddy the water with inaccurate anecdotal examples:
I ask you AGAIN (third time):
You say if a photographer trades a portrait with a plumber it IS a barter, but a photographer trades a portrait with a model is not...SO, I ask again...what makes a plumber's work worth barter value, but a model's is not...according to your example.
Your examples are NOT credible. What makes a plumber's work worth barter value, but you say a model's is not...according to your quoted logic and example.
Michael Lohr wrote: As a commercial photographer I do not have to separate my work that wont make me money from work that will.
I can pretty much write off anything related to my craft. We are allowed to practice and try new ideas. We are allowed to learn new things and in the process we can write off the expenses for that learning
Totally inaccurate and misleading. There are very specific limits and qualifications. You don't just get to claim "anything related to your craft" that's non-profitmaking as an "educational" expense. I think you better read the IRS code on expenses again (and be honest with your CPA). You have been very lucky.
In spite of our debate, I like your work (and awesome studio!). I don't want to see bad things happen to you at future IRS audits. It's NOT simple...much of the code is very ambiguous. And it sounds like they are "dialing in on you" with each audit.
You must be able to show the education maintains or improves skills required in your trade or business, or that it is required by law or regulations, for keeping your license to practice, status, or job. For example, an attorney can deduct the cost of attending Continuing Legal Education (CLE) classes that are required by the state bar association to maintain his or her license to practice law.
Education expenses you incur to meet the minimum requirements of your present trade or business, or those that qualify you for a new trade or business, are not deductible. This is true even if the education maintains or improves skills presently required in your business. For more information on education expenses, see Publication 970.
ArtisticGlamour wrote: You mean a mis-informed decision. I dismiss you as inaccurate and mis-informed, but I will still call bullshit. As mentioned, you have been told you are wrong by two CPA's and a Tax Lawyer, just on this thread.
You are being disingenuous.
The link to the CPA dealt with a commercial situation. I responded and agreed in that situation it would be barter.
That example has no bearing on how most shoots, including yours, are being conducted.
Michael Lohr wrote: As a commercial photographer I do not have to separate my work that wont make me money from work that will.
In spite of our debate, I like your work (and awesome studio!). I don't want to see bad things happen to you at future IRS audits. It's NOT simple...much of the code is very ambiguous. And it sounds like they are "dialing in on you" with each audit.
I have now been audited three times in last seven years.
The first one was a forensic audit, where they look at every thing.
I have gotten money back on my last two audits.
This one was for 2010 and 2011.
Since everything was close to perfect they dismissed the 2011 portion of the audit
The last two they focused on Both schedule Cs.( studio and Photography) There is nothing I am hiding.
You implying I am doing this wrong. If I was doing this wrong they would of nailed me by now.
The bottom line you do not have an real world examples.
I do.
Quoting other sources and taking things out of context are not examples.
Michael Fryd
Posts: 2,786
Miami Beach, Florida, US
There is frequently a difference between what is legal, and what you likely can get away with.
For instance, if you buy camera gear for your child to play with, you are not allowed to deduct it as a legitimate business expense. If you have a photography business, you could claim the gear was for the business, and there's a good chance you would not get caught.
"Not being caught" is not the same as "being legal". A pro photographer is not allowed to deduct personal photographic expenses. You may be able to do so, and pass an audit, but that does not make it legal.
Keep in mind that the fact that you have gotten away with something, does not mean that all others will be able to get away with it.
Many photographers are very concerned about staying within the letter of the law. Some photographers are in a position where they attract additional scrutiny. They may want to run for public office. They may be involved in the production of legal (but unpopular) porn. They may have taken sexy photos of an IRS agents wife without his knowledge or approval.
Sometimes it is not about what the typical person can get away with, but about what is 100%, squeaky-clean, legal.
My advice is that people should follow the law. Frequently, you have a choice in how you structure or classify things. Where reasonable to do so, you may want the make the choice that lowers your tax burden.
For instance you have a choice when working with a model whether to structure the shoot as an unpaid test (likely not taxable) or a barter or services (clearly taxable under IRS rules). Where the facts support structuring it as a test, feel free to do so. Where there is a barter, I advise that you declare it as such.
By the way, encouraging others to file fraudulent returns designed to avoid detection, may be a violation of IRC § 6701 (aiding and abetting understatement of tax liability). I am not suggesting that there is a good chance you will be fined, I am suggesting there is a possibility.
Michael Fryd wrote: There is frequently a difference between what is legal, and what you likely can get away with.
For instance, if you buy camera gear for your child to play with, you are not allowed to deduct it as a legitimate business expense. If you have a photography business, you could claim the gear was for the business, and there's a good chance you would not get caught.
"Not being caught" is not the same as "being legal". A pro photographer is not allowed to deduct personal photographic expenses. You may be able to do so, and pass an audit, but that does not make it legal.
Michael Lohr wrote: You implying I am doing this wrong. If I was doing this wrong they would of nailed me by now.
Michael, I would NOT bet your business and your studio on that.
I am not an expert, but even I see some "red flags" with some of what you have said. And even as I enjoy the spirited debate, I really don't want to see anything bad happen to you or your business. I'm also not saying you are doing anything "intentionally" wrong. But (for example) you cannot just expense "everything craft related" as a business expense.
There are specific qualified definitions.
What I am saying is that the CPA/Tax Attorney have said other than what you are claiming. They seem to agree with the code I read.
It would be worth your time to contact a Tax Attorney and make sure that the right questions are asked. Don't let emotion or Mayhem debate cloud your perspective. Or, what the industry has "gotten away with as common practice". Cover your ass, reduce your risks, and let the "other guy" be the IRS example.
Michael Fryd wrote: There is frequently a difference between what is legal, and what you likely can get away with.
For instance, if you buy camera gear for your child to play with, you are not allowed to deduct it as a legitimate business expense. If you have a photography business, you could claim the gear was for the business, and there's a good chance you would not get caught.
"Not being caught" is not the same as "being legal". A pro photographer is not allowed to deduct personal photographic expenses. You may be able to do so, and pass an audit, but that does not make it legal.
Keep in mind that the fact that you have gotten away with something, does not mean that all others will be able to get away with it.
Many photographers are very concerned about staying within the letter of the law. Some photographers are in a position where they attract additional scrutiny. They may want to run for public office. They may be involved in the production of legal (but unpopular) porn. They may have taken sexy photos of an IRS agents wife without his knowledge or approval.
Sometimes it is not about what the typical person can get away with, but about what is 100%, squeaky-clean, legal.
My advice is that people should follow the law. Frequently, you have a choice in how you structure or classify things. Where reasonable to do so, you may want the make the choice that lowers your tax burden.
For instance you have a choice when working with a model whether to structure the shoot as an unpaid test (likely not taxable) or a barter or services (clearly taxable under IRS rules). Where the facts support structuring it as a test, feel free to do so. Where there is a barter, I advise that you declare it as such.
By the way, encouraging others to file fraudulent returns designed to avoid detection, may be a violation of IRC § 6701 (aiding and abetting understatement of tax liability). I am not suggesting that there is a good chance you will be fined, I am suggesting there is a possibility.
I took the questions both you and the OP had to the audit.
After testing the waters on the first question I asked the questions in regard to this topic in several different manners.
I was fully expecting an ambiguous answer. I only got a clear and decisive answers.
The gist of the answer can be summed up. A photographer and model, working on a photo project is not a barter situation.
I even used a clear example where they had distinct and separate things out of the shoot.
A photo crew working on a editorial shoot where they agree only all trying to get published is not a barter situation.
A trade between say, a Dentist and a Photographer, would be a barter situation.
Michael Lohr wrote: A trade between say, a Dentist and a Photographer, would be a barter situation.
I understand Bro! But something doesn't add up.
Why would a "photographer-dentist" clear trade of services be a "barter"...but a "photographer-model" clear trade of services NOT be a barter. It doesn't add up. Somehow I think the question was not clear to the IRS agent. I don't mean intentionally.
It would be safer for you to VERIFY the situation with a Tax Attorney.
You have a LOT (more than I) to risk if you are wrong.
Michael, I would NOT bet your business and your studio on that.
I am not an expert, but even I see some "red flags" going on with some of what you have said. And even though I enjoy the spirited debate, I really don't want to see anything bad happen to you or your business. I'm also not saying you are doing anything "intentionally" wrong.
What I am saying is that the CPA/Tax Attorney have said other than what you are claiming. They seem to agree with the code I read.
It would be worth your time to contact a Tax Attorney and make sure that the right questions are asked. Don't let emotion or Mayhem insults cloud your perspective. Or what the industry has "gotten away with as common practice". Cover your ass, reduce your risks, and let the "other guy" be the IRS example.
I would bet my business on it.
I did my homework. I have a Bachelor of Science Degree in photography
I still went out side and verified what I thought I knew.
I asked my CPA.
I asked and provided links to the APA
I asked the agent who did my audit your questions.
The CPA you keep trotting out as example was shown a shoot with a clear commercial application. One I agreed could be considered barter.
Why would a "photographer-dentist" clear trade of services be a "barter"...but a "photographer-model" clear trade of services NOT be a barter. It doesn't add up. Somehow I think the question was not clear to the IRS agent. I don't mean intentionally.
It would be safer for you to VERIFY the situation with a Tax Attorney.
You have a LOT (more than I) to risk if you are wrong.
You have to read the other parts of the tax code.
There is a reason the Barter section uses the word "May" instead of "must"
Michael Lohr wrote: I would bet my business on it.
~
The CPA you keep trotting out as example was shown a shoot with a clear commercial application. One I agreed could be considered barter.
You have said under NO circumstances is a photographer-model shoot a barter.
That can NOT be correct.
Michael Lohr wrote: Why would I care when an IRS agent said it wasn't barter under EVERY scenario I gave him when it involved only a model and photographer.
Because it doesn't add up. A professional model is just as "professional/commercial" as a professional dentist.
A TRADE of professional services is a barter. Why would it be a barter with the dentist, but not the model? It does NOT add up.
Especially when you publicly "label" it and identify it as a "trade" shoot.
But, Cheers, and continued good luck. I do wish you well.
ArtisticGlamour wrote: I do wonder how your CPA advises you that it's okay to take a depreciation deduction on your studio and equipment and then use it for "non-commercial" personal shoots. I'm not saying it's not done all the time...I just wonder how your CPA reconciles it. But WTF do I know...I'm just a hobby shooter. (who only shoots unpaid "test" shoots).
That's easy. If you use the studio M-F and the person use is on the weekends, you write of 5/7ths because that's the exact value that's been put towards generating income.
MC Photo wrote: That's easy. If you use the studio M-F and the person use is on the weekends, you write of 5/7ths because that's the exact value that's been put towards generating income.
Exactly...but then he says he "depreciates" 7/7 of the equipment and studios lifespan. RED flag! IRS auditor -now- starts looking into EVERYTHING much closer, and with a much more "disagreeable" eye.
You have said under NO circumstances is a photographer-model shoot a barter.
That can NOT be correct.
I never said that.
I agreed with GPS under his scenario with licensing, this may be barter.
I could come up with other examples where a barter situation would be more clear cut.
But none of them would relate to a normal photographer /model relationship.
Michael, I would NOT bet your business and your studio on that.
I am not an expert, but even I see some "red flags" with some of what you have said. And even as I enjoy the spirited debate, I really don't want to see anything bad happen to you or your business. I'm also not saying you are doing anything "intentionally" wrong. But (for example) you cannot just expense "everything craft related" as a business expense.
There are specific qualified definitions.
What I am saying is that the CPA/Tax Attorney have said other than what you are claiming. They seem to agree with the code I read.
It would be worth your time to contact a Tax Attorney and make sure that the right questions are asked. Don't let emotion or Mayhem debate cloud your perspective. Or, what the industry has "gotten away with as common practice". Cover your ass, reduce your risks, and let the "other guy" be the IRS example.
You're making this very personal with him. Many of your posts are starting with a description of him. Maybe just address the facts?
Also, the CPS/Tax Attorney are disagreeing with "your perception" of what he's said. You have not once repeated an paraphrased what he's said in an attempt to ensure you're understanding what he's trying to communicate before you take it apart. This is a context where imperfect communication is not a reason to dismiss someone's underlying point.
ArtisticGlamour wrote: You have said under NO circumstances is a photographer-model shoot a barter.
That can NOT be correct.
Michael Lohr wrote: I never said that.
Michael...get your facts straight Bro!
Michael Lohr wrote: There is no need for any concern. There isn't any circumstances where the IRS would consider the shooting between the model and photographer a barter situation.
Michael Lohr wrote: Why would I care when an IRS agent said it wasn't barter under EVERY scenario I gave him when it involved only a model and photographer.
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