Dick Adams wrote:
- quote -

deductions. All of us were agog over this case at the time,which may
have been before the final TC considerations.

But still the IRS has a checklist, sort of like the old 20 questions for
subcontractors/employees which help clarify facts and circumstances.

ChEAr$,
Harlan

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In article <gkpadb$7sv$1[at]blue.rahul.net> , spope33[at]speedymail.org (Steve Pope) writes:
| Dick Adams <rdadams[at]panix.com> wrote:
|
| > removeps-groups[at]yahoo.com <removeps-groups[at]yahoo.com> wrote:
|
| > > rdad...[at]panix.com (Dick Adams) wrote:
|
| > > > I came to learn this the hard way. Susan had expenses over a four
| > > > year period when she was writing a Women's Studies book. When the
| > > > royalties came in, there was no way to deduct the expenses.
|
| > > > To paraphrase Katie, writing books comes under the hobby rules.
|
| > > Are you sure? If you have a loss in greater than 3 out of 5 years,
| > > your endeavor may still be be a business if you had the intent of
| > > making a profit. You have to have the books and other things to
| > > prove intent.
|
| > Yes, I am sure. The IRS position is the failure to make a profit
| > creates the rebuttable presumption of a hobby. Your rebuttal
| > comes from having "the books and other things to prove intent."
|
| So is the sequence of events something like the following: With
| reported losses years 1 through 4, the year 4 return gets examined,
| and the year 4 losses, along with carried-forward losses from
| years 1-3 get disallowed. This forces an amended year 5 return,
| on which there were revenues, to delete all the carried-forward
| losses from that one.

Does the amended year 5 return also get to drop the self-employment
tax that was either due or would be due without the carried-forward
losses?

Dan Lanciani
ddl[at]danlan.*com

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Harlan Lunsford <lunstax[at]bellsouth.net> wrote:

- quote -

Ranciato was a retail pet store that after being profitable for
years went into the tank. Tax Court denied deductions. Appellate
Court remanded for further consideration. Tax Court reconsidered
and again denied deductions. Does not sound like a good cite to
me.

Dick

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Dick Adams <rdadams[at]panix.com> wrote:

- quote -

So is the sequence of events something like the following: With
reported losses years 1 through 4, the year 4 return gets examined,
and the year 4 losses, along with carried-forward losses from
years 1-3 get disallowed. This forces an amended year 5 return,
on which there were revenues, to delete all the carried-forward
losses from that one.

Is that approximately correct?

So TP would have been better off not having any losses in
years 1 and 2 ... if it *were* a hobby those years, instead
of a business, that would have enabled the year 3 and 4
losses to be part of a business and be allowed. Am I mistaken here?

Can year 1 and 2 be amended to this effect? Hobby, that
then turned into business in year 3?

Steve

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Dick Adams wrote:
- quote -

Ranciato? sounds like.......

ChEAr$,
Harlan Lunsford, EA n LA

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removeps-groups[at]yahoo.com <removeps-groups[at]yahoo.com> wrote:
- quote -

Yes, I am sure. The IRS position is the failure to make a profit
creates the rebuttable presumption of a hobby. Your rebuttal
comes from having "the books and other things to prove intent."

Dick

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On Jan 14, 7:42 pm, rdad...[at]panix.com (Dick Adams) wrote:

- quote -

Are you sure? If you have a loss in greater than 3 out of 5 years,
your endeavor may still be be a business if you had the intent of
making a profit. You have to have the books and other things to prove
intent.

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

Dick Adams <rdadams[at]panix.com> wrote:

- quote -

I'm sure you're right, but I don't really understand.

Why shouldn't there be a NOL carryforward from the years in
which expenses occured, to the years that royalties came in?

(Recognizing that it's four years, not three, so there may
be more effort in justifying it.)

Steve

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Katie <katiej_1958[at]yahoo.com> wrote:
- quote -

I came to learn this the hard way. Susan had expenses over a four
year period when she was writing a Women's Studies book. When the
royalties came in, there was no way to deduct the expenses.

To paraphrase Katie, writing books comes under the hobby rules.

- quote -

The OP wrote that he had ZERO 2008 income. So I suspect he is
no longer a college professor. There may also be an issue of
whether he was full-time or adjunct. But if he has income in
the past as a writer or even unpaid publications (which are
the stock and trade of academics), his MFA writing course may
be deductible as continuing professional education.

As a retired full-time university professor, I wonder how
far I could safely push the free-ride for academics.

Dick

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On Jan 14, 10:39*am, "t.s.eliot2...[at]gmail.com"
<t.s.eliot2...[at]gmail.com> wrote:
- quote -


Whether you are engaged in a trade or business is a question that can
be answered only by taking into account all of the relevant facts and
circumstances, not just for the current year but over the longer
haul. If you are in the trade or business of being a freelance
writer, you can deduct your current expenses under Sec. 263A(h)
regardless of whether you have income in the same year. Presumably
you will have income next year.

The question is whether your writing activities are engaged in for
profit pursuant to IRC Sec. 183. Sec. 183(d) provides that if gross
income from the activity exceeds expenses in three of five consecutive
years, then unless the IRS establishes to the contrary, the activity
is presumed to be engaged in for profit.

Your education expenses may be deductible with reference to your
employment as a college professor.

Katie in San Diego

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Katie <katiej_1958[at]yahoo.com> wrote:

- quote -

Thanks for the clarification, Katie. That's great information.

Stu

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On Jan 14, 12:40*pm, Katie <katiej_1...[at]yahoo.com> wrote:
- quote -

Would I still be considered in the trade, if I had no income in 2008?
The drift I'm getting is I do indeed have a large deduction I can take
even with no income for the year. I'm still unsure if this means I can
also take education expenses as deductions in my case.

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On Jan 13, 3:01*pm, "Stuart A. Bronstein" <spamt...[at]lexregia.comwrote:
- quote -


Stu, IRC Sec. 263A, which in general requires the capitalization of
costs incurred in the production of real or tangible personal
property, provides an exemption for freelance authors, photographers
and artists. Books are specifically included in the definition of
"tangible personal property" for purposes of Sec. 263A, but the Sec.
263(h) exemption allows current deduction of expenses by an individual
who is in the trade or business of being a writer, photographer, or
artist.

Katie in San Diego

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rdadams[at]panix.com (Dick Adams) wrote:
- quote -

I thought a book-writer's expenses are capitalized and amortized
starting in the year the book is finished or published. Is that way
off base?

Stu

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<t.s.eliot2009[at]gmail.com> wrote:

- quote -

The good news is that full-time University Professors qualify for
a deduction of tuition for almost every educational expense. If
you are adjunct faculty, you may qualify for the deduction if you
have full-time employment as a journalist.

- quote -

That's a problem. You and I are both supported by a woman!
But I can still deduct my professional association dues and
continuing eduction expenses.

- quote -

Expenses directly related to the novel are deductible in 2008
on Schedule C.

- quote -

Other than what I've written above, more detailed information
is needed.

Dick

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<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

In 08, I had roughly $5,000 in stationary, books, mailing, editing
services, software and similar expenses. I also spent $15,000 to
matriculate part-time in a MFA in writing program. I earned $0 income
in 2008. I am a bone fide writer (journalist and professor) with
income, tax forms, etc to prove it, pre-2008. It is possible (I would
say 50/50) I will ern income from writing in 2009. (I am working on a
long novel I hope to be published in 2010.

So what do I do with my taxes for this year? I have $20,000 in
expenses. Do I simply claim a $20K loss from this business activity on
my joint taxes with my wife? Other options?

Thanks in advance.

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<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >