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Old 03-03-2011, 01:35 PM   #101 (permalink)
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Hobby is the conservative approach. When in doubt, with the IRS it's always better to be conservative than even risk them calling....
Ok, I understand. Last question, then I'll leave you alone. Does this mean I need to keep track of what I buy & what I sell and keep both records for when tax time rolls around each year or is there more that I need that I'm not thinking of? I appreciate all the help you've given us.
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Old 03-03-2011, 01:48 PM   #102 (permalink)
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Ok, I understand. Last question, then I'll leave you alone. Does this mean I need to keep track of what I buy & what I sell and keep both records for when tax time rolls around each year or is there more that I need that I'm not thinking of? I appreciate all the help you've given us.
You should always keep a paper trail. The more proof you have the better. Keep track of the supplies and such that you use also.
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Old 03-03-2011, 01:51 PM   #103 (permalink)
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You should always keep a paper trail. The more proof you have the better. Keep track of the supplies and such that you use also.


Great idea! I know that was brought up before, too! Thanks again for the advice. Time to build up the paper trail.
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Old 03-03-2011, 02:23 PM   #104 (permalink)
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Thanks to raiderguy10 for actually giving some good prefessional advise in this thread compared to what was given in the beginning.

This is what you need to know:
You are better off robbing a bank, naked, covered by a sandwich board with ALL your personal information written on the board than to screw with the IRS. I would go far as saying that 9.5 out of 10 people posting in this thread will not receive the 1099.
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Old 03-03-2011, 02:40 PM   #105 (permalink)
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I know the "what ifs" keep growing, but I thought of another personal example

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I "use" my magazines to read & educate myself, just as I can say I "use" my cards to read & educate myself. I just don't see how the IRS can single out some of these things when "personal use" can be such a vague description.
I have rare collectable engineering books in my library that I have owned for decades (dog breeding books too). I used the calculations in these engineering books in college, used them for work currently, used them for license exams and also cited them as sources in acedemic published papers. The books were rare and old when I first bought them and have gone up in value since I first bought them. I mostly have no recipts, but I do have some. If I sold the books today I would make money, but not really more than inflation of the dollar since I first purchased them.

Which brings me to your statements:

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You use your car to get you to work. You use your clothes to keep you warm. What do you "use" your Sam Bradford autographed football for? If it's personal enjoyment, it's insignificant because you will hold it forever and won't have to worry about a sale. But are you holding it hoping it goes up in value? I'd venture to say that most of us here are.....

1) Personal use - capital gain/loss. Can't claim a loss, and hardly ever can generate a gain. Cards/Memorabilia are not personal use property, but personal use property was asked about earlier in the thread so I addressed it here
Does that mean if nephinfan regularly publishes sportscard articles of anykind that he has now satisfied the requirement of "personal use property" or even "business use" because he has published an article in a peer reviewed Journal, trade publication etc with the sportscards as a cited source?

What I am getting at is, if a person can show that they used a "collectible" item for something other than "collecting with the hopes of reselling for an appreciation in value" is it now documentable as more than just a "hobby"?

Quote:
I would go far as saying that 9.5 out of 10 people posting in this thread will not receive the 1099.
If they are not liquidating. I am really interested in the tax implacations of "liquidating" post this new 1099 reporting policy. I am pretty sure 100% of us on this board will face the issue of "liquidating" our collectables at some point in our lifetime. Or even our families, should the unspeakable freak accident happen to us all by our lonesome.

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Old 03-03-2011, 02:51 PM   #106 (permalink)
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I know the "what ifs" keep growing, but I thought of another personal example



I have rare collectable engineering books in my library that I have owned for decades (dog breeding books too). I used the calculations in these engineering books in college, used them for work currently, used them for license exams and also cited them as sources in acedemic published papers. The books were rare and old when I first bought them and have gone up in value since I first bought them. I mostly have no recipts, but I do have some. If I sold the books today I would make money, but not really more than inflation of the dollar since I first purchased them.

Fair or unfair, gains/losses are not affected by inflation. You are allowed to increase your basis if you put more $ into it throughout time. For instance, I buy a 1963 shelby for $20,000. I spend $10,000 fixing it up and restoring it. My investment is now $30,000 in the car. If I sell it for $50,000 I have a $20,000 gain on my tax return, not a $30,000. In your case, old rare books would not be personal use property any more (unless used recently); they are probably investment pieces. Either case (personal use, or investment), they are capital gains and they are reported on your return.

Which brings me to your statements:



Does that mean if nephinfan regularly publishes sportscard articles of anykind that he has now satisfied the requirement of "personal use property" or even "business use" because he has published an article in a peer reviewed Journal, trade publication etc with the sportscards as a cited source?

What I am getting at is, if a person can show that they used a "collectible" item for something other than "collecting with the hopes of reselling for an appreciation in value" is it now documentable as more than just a "hobby"?



If they are not liquidating. I am really interested in the tax implacations of "liquidating" post this new 1099 reporting policy.

This really can't be true etiher. Would you spend $17,000 to buy a Strasburg superfactor to write an article on it, or would you research it by other means? What do you gain by physically having it in your ownership? Now I'm assuming you are being paid to do these articles. So if you would, instead, take a trip to Cooperstown to see firsthand the history of baseball and you write an article - you can use the trip as a writeoff. I don't understand why you would need to purchase/own a hat worn by Babe Ruth to write an article on it. Seems to me that let's say you have the complete set of T206 cards, and that pushes you into wanting to write an article for Beckett. Well, there is a reason you own those cards. Again, either personal enjoyment or investment. Regardless, if/when you sell for more than you bought them, it'll be a capital gain on your tax return.
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Old 03-03-2011, 03:19 PM   #107 (permalink)
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Before I begin, thanks for continuing to discuss this item.

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In your case, old rare books would not be personal use property any more (unless used recently); they are probably investment pieces. Either case (personal use, or investment), they are capital gains and they are reported on your return.
What's considered recent? I understand it may be subjective. I write about one peer reviewed journal article a year. They are not all paid and occationally I get a paid trade article. I took my license exams with the state years ago, but the books were needed to pass and were allowed to be carried into the exam room. I bring this up because you can't write the articles or use the books in the exam room if you don't own them. Sure you could "borrow" them in some fashion, but if using them comes up every couple years, buying and owning is better option.

As for your car example. The money isn't put directly into the books, but money is paid to get the articles out for review and test exam fees were paid, as was tuition (I still have the graded papers to prove they were cited filed away).

Quote:
This really can't be true etiher. Would you spend $17,000 to buy a Strasburg superfactor to write an article on it, or would you research it by other means? What do you gain by physically having it in your ownership? Now I'm assuming you are being paid to do these articles.
Not to be snarky, but it can be true, so please don't take my response that way. Exact example: I have a colleague who does independent acedemic research on comic books. This research is published as short articles in many different peer reviewed acedemic journals (not paid). The reason why this is done, is so later he can secure acedemic publishing book deals based on those peer reviewed papers. The final acedemic book deal is paid, but the short article journal publishings are not paid. However that unpaid publishing history is required to secure a paid book deal from an acedemic publisher. No peer-reviewed journal articles, no book deal. Its much easier to conduct this research long term by owning the comics rather than simply viewing them or borrowing them. Yes, some very expensive ones are borrowed or viewed, but the bulk can just be bought and stored for the simplicity of having it around when required.

This person without a shadow of a doubt has documentation that the comics are not being held as "collectible" items. They are clearly being used for something other than "collecting with the hopes of reselling for an appreciation in value". Not all the up front work is paid, but that is the nature of securing paid work later. I am in some ways in the same boat with my books. How would this play out if all was liquidated, assuming there is supporting documentation?

Quote:
This really can't be true etiher. Would you spend $17,000 to buy a Strasburg superfactor to write an article on it, or would you research it by other means? What do you gain by physically having it in your ownership?
How does an IRS agent determine need, without having any knowledge of the research being conducted? Sounds like its just arbitrary. The way you worded your response would in opinion, just be an arbitrary interpretation of "what is required" to get the article and supporting research done. You would be surprised how many items are not available to be viewed for research (even when you are a staff member at an acedemic instituition conducting the research). Basically if you don't own these items, you can not see them to then later write about.

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Old 03-03-2011, 03:31 PM   #108 (permalink)
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Before I begin, thanks for continuing to discuss this item.



What's considered recent? I understand it may be subjective. I write about one peer reviewed journal article a year. They are not paid, but are documents and used for acedemic tenure review. I took my license exams with the state years ago, but the books were needed to pass and were allowed to be carried into the exam room. I bring this up because you can't write the articles or use the books in the exam room if you don't own them. Sure you could "borrow" them in some fashion, but if there use comes up every couple years buying and owning is better.

As for your car example. The money isn't put directly into the books, but money is paid to get the articles out for review and test exam fees were paid, as was tuition (I still have the graded papers to prove they were cited filled away).

Regardless either scenario it's a capital gain to the taxpayer when they dispose of it. You initially purchased them as personal use property, and you expense business property at the time of purchase (so it couldn't qualify for a business deduction). So either case, you have a capital gain - personal use or investment


Not to be snarky, but it can be true, so please don't take my response that way. Exact example: I have a colleague who does independent acedemic research on comic books. This research is published as short articles in many different peer reviewed acedemic journals (not paid). The reason why this is done, is so later he can secure acedemic publishing book deals based on those peer reviewed papers. The final acedemic book deal is paid, but the short article journal publishings are not paid. However that unpaid publishing history is required to secure a paid book deal from an acedemic publisher. No peer-reviewed journal articles, no book deal. Its much easier to conduct this research long term by owning the comics rather than simply viewing them or borrowing them. Yes, some very expensive ones are borrowed or viewed, but the bulk can just be bought and stored for the simplicity of having it around when required.

This person without a shadow of a doubt has documentation that the comics are not being held as "collectible" items. They are clearly being used for something other than "collecting with the hopes of reselling for an appreciation in value". Not all the up front work is paid, but that is the nature of securing paid work later. I am in some ways in the same boat with my books. How would this play out if all was liquidated, assuming there is supporting documentation?

In your example, this is what I would probably conclude. I would say that he is a comic book enthusiast who enjoys reading comics - regardless of the potential for jobs later -so on and so forth. Otherwise, why wouldn't he blog about WWII? And it makes sense, you start out by writing about things that interest you and things you know. I would venture to say that this individual has always loved (or is starting to get into) comic books for personal enjoyment. It sounds like a hobby to me, with the blogging and articles done to gain potential jobs yes but it sounds ike something he does more so for personal enjoyment.

Now, if he was being paid a salary by Comic World Magazine it depends on how he is viewed. There are 2 scenarios:

1) Employee - If he's an employee and he purchases these comic books for the articles he will either be paid back by the company for the purchase, or he won't. If he is he can either include the income in his taxable income and include the expense as a FOR AGI deduction (net effect is $0), or he can exclude the income and exclude the expense (again, net effect is $0). If he is an employee and doesn't get reimbursed, then they are misc itemized deductions subject to a 2% agi limitation, and again are itemized.

2) Contractor - if he's a contractor they can be written off or subtracted off of income as long as it is reasonable, documented, and necessary (same requirement for any business to write off an expense). So if he meets these 3 criteria, he can deduct it.

Because he is currently not getting paid, I would view it as a hobby not a business or personal use. The other question to ask would be, what is this individual's intent with the comics when they are done with them?
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Old 03-03-2011, 03:37 PM   #109 (permalink)
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How does an IRS agent determine need, without having any knowledge of the research being conducted? Sounds like its just arbitrary. The way you worded your response would in opinion, just be an arbitrary interpretation of "what is required" to get the article and supporting research done. You would be surprised how many items are not available to be viewed for research (even when you are a staff member at an acedemic instituition conducting the research). Basically if you don't own these items, you can not see them to then later write about.
Yes, it is VERY arbitrary. Just because you get audited does not mean you owe the IRS money. It means they are giving you a chance to justify your position. It's up to you to have the proper documentation to be able to do that. If you can't properly do it, that's when you will have additional taxes due.
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Old 03-03-2011, 03:53 PM   #110 (permalink)
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Regardless either scenario it's a capital gain to the taxpayer when they dispose of it. You initially purchased them as personal use property, and you expense business property at the time of purchase (so it couldn't qualify for a business deduction). So either case, you have a capital gain - personal use or investment
I think I get this part. Essentially the IRS is saying that some items may eventually no longer be considered personal use property and since they were not originally expensed as business property they can't be that either.

So, a loophole in thier favor of the IRS.

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Because he is currently not getting paid, I would view it as a hobby not a business or personal use. The other question to ask would be, what is this individual's intent with the comics when they are done with them?
I think you missed my point. The old articles are not potential deals, they actually became books. He publishes a couple of unpaid articles are year in "peer reviewed journals". But the reseach materials needed to finish the articles costs money. He has to do this to as a requirement to get tenure at the univeristy. The publishers do not pay him for these articles, but universities pay hundreds of thousands of dollars for access to other peoples publshed articles. The publisher gets their access fee every year, but the writers of the articles get nothing, however they are a documented portion of this business model. These articles are not blogs, they are journal articles that are stored in university libraries and cited by other acedemics INDEFINATELY.

Second, once he has established a publishing record for a particular topic he then goes to secure a "publshing deal" with an acedemic publisher for money. He has around 4 published books based on around 15-20 unpaid acedemic journal articles. Thats how it works for acedemics. The lead time on a book deal is a few years sometimes. Todays 4-5 unpaid journal articles is tomorrow's one book deal. His track record and history of publishing for pay is established, but you can't document the future payment or book deal.
Do you think acedemic publshing while employed by an acedemic instituition is the same as being an "enthusiast"? How would the IRS determine such a classification?

He is neither a contractor or an employee of a magazine. He and other like him work for universities, think tanks or non-profit organizations. They are not classified as "writers" or "freelancers", but they do have the freedom to pursue such research part-time on the clock. Which brings me to the example of another person I know at USGS that can do college courses and some indepenent research on the clock up to a defined limit.

This person without a shadow of a doubt has documentation that the comics are not being held as "collectible" items. They are clearly being used for something other than "collecting with the hopes of reselling for an appreciation in value". Is this yet another loophole for the IRS to discount deductions?

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Old 03-03-2011, 03:57 PM   #111 (permalink)
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I think I get this part. Essentially the IRS is saying that some items may eventually no longer be considered personal use property and since they were not originally expensed as business property they can't be that either.

So, a loophole in thier favor of the IRS.

I wouldn't really call it a loophole necessarily. There is a reason you kept it. It's either because you need it (personal use), you are able to sell it in the future, or you are a hoarder . Either case, if you sell something for more than you bought it, the IRS wants their share. Bottom line.

I think you missed my point. The old articles are not potential deals, they actually became books. He publishes a couple of unpaid articles are year in "peer reviewed journals". But the reseach materials needed to finish the articles costs money. He has to do this to as a requirement to get tenure at the univeristy. The publishers do not pay him for these articles, but universities pay hundreds of thousands of dollars for access to other peoples publshed articles. The publisher gets their access fee every year, but the writers of the articles get nothing, however they are a documented portion of this business model. These articles are not blogs, they are journal articles that are stored in university libraries and cited by other acedemics INDEFINATELY.

Second, once he has established a publishing record for a particular topic he then goes to secure a "publshing deal" with an acedemic publisher for money. He has around 4 published books based on around 15-20 unpaid acedemic journal articles. Thats how it works for acedemics. The lead time on a book deal is a few years sometimes. Todays 4-5 unpaid journal articles is tomorrow's one book deal. His track record and history of publishing for pay is established, but you can't document the future payment or book deal.
Do you think acedemic publshing while employed by an acedemic instituition is the same as being an "enthusiast"? How would the IRS determine such a classification?

He is neither a contractor or an employee of a magazine. He and other like him work for universities, think tanks or non-profit organizations. They are not classified as "writers" or "freelancers", but they do have the freedom to pursue such research part-time on the clock.

Is this yet another loophole for the IRS to discount deductions?

I understood your question. My last sentence of my response was the main kicker. What are the intentions of the comics when he no longer needs them? Will he sell them (if sell for more, it's a capital gain), throw them (sunk cost), donate them (itemized deduction FMV date of donation), or keep them for future reference (personal use property).
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Old 03-03-2011, 04:25 PM   #112 (permalink)
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Do paypal payments sent as "Gifts" count toward the $20,000
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Old 03-03-2011, 04:29 PM   #113 (permalink)
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I did that for 2010, i have a EIN number for my "card business". This has alot of perks, since i can claim 5% of my house as my officeusing the standard mortage insurance and primiums, and deduct as follows, Spent on Cards/memoribila for 2010 $92,213 Sold as of 2010 [Net income] $36,712 [Gross income after Fees I.E paypal,Ebay] $32,134 Inventory as of Dec 31st 2010 - $42,000
Claims [Mailer,ink,paper,computer,desk,shelves, card supplies] $2400 total LOSS and deduction

So on a break down this is how you get taxed ill round it out
$92,000 Spent
-$42000 Inventory left
-$32000 Income/ to be taxed if any
+ $2400 Claims deductions
+ office expenses, Electricity,heat, house usage to be determained on size of home in %

mine came out to about -$30,000 for the year and was writtin off against what i made as my full time job also lowering my tax bracket for me since i made no money.

Keep clean records, from paypal and ebay. Print monthly and file acordingly always remember this is a business and everything related is always for sale.
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Old 03-03-2011, 05:25 PM   #114 (permalink)
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Thanks again for keeping this going

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Either case, if you sell something for more than you bought it, the IRS wants their share.
Even if it was purchased for personal use and was then used for business? Not to beat a dead horse, but can you just ammend the old return if you get a book deal <3 years later. My friend can basically keep track of it all up front, no problem. He knows when a book deal is likely, so can he just go back and ammend the old return saying here is proof of todays book deal that required XXX items less than 3 years ago?

Quote:
1- Will he sell them (if sell for more, it's a capital gain)
2- throw them (sunk cost),
3- donate them (itemized deduction FMV date of donation),
4- or keep them for future reference (personal use property).
Well this is my fault for not clarifying this as a separate question. I meant should he ever liquidate it all and end up with with a large $20,000+ figure one year, what will the IRS say? Are they personal items? Are they appreciated goods? They were clearly not held as collectables with hopes of appreciation and assuming they are sold at break even or at a loss, he should not owe taxes with or without a shoebox of recipts. But what will the IRS say?

It doesn't seem to make sense that he should draw up an EIN and "act like a separate business" to avoid paying taxes on items that he needed in order to write papers for tenure at the university.

Also why isn't camarofan112 example considered a hobby? I have realtives who did the same for thier dog breeding side business and it seems that when they make money the IRS says "its a business", but when they loose money the IRS has said some years "this is a hobby".

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Old 03-03-2011, 05:33 PM   #115 (permalink)
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Thanks again for keeping this going



Even if it was purchased for personal use and was then used for business? Not to beat a dead horse, but can you just ammend the old return if you get a book deal <3 years later. My friend can basically keep track of it all up front, no problem. He knows when a book deal is likely, so can he just go back and ammend the old return saying here is proof of todays book deal that required XXX items less than 3 years ago?

You cannot amend an old return like that. I would suggest him starting to do freelance articles on the side - like you mentioned to he could do while on the clock. If he starts earning income as a freelance writer, he can write these types of expenses off as a sole proprietor.

After he signs his deal, and he is free to pursue other ventures he will be able to write expenses like this off all the time- and treat them based on how I mentioned earlier if he is an employee or a contractor


Well this is my fault for not clarifying this as a separate question. I meant should he ever liquidate it all and end up with with a large $20,000+ figure one year, what will the IRS say? Are they personal items? Are they appreciated goods? They were clearly not held as collectables with hopes of appreciation and assuming they are sold at break even or at a loss, he should not owe taxes with or without a shoebox of recipts. But what will the IRS say?

I would guess they will be personal use property still to him. Same way as a garage sale treatment. If he sells for more than what he paid, report the gain. If he sells $20,000 worth of comics, but he paid $30,000 when he bought them that would be tax-free money is my opinion assuming he can justify it not being a hobby.

It doesn't seem to make sense that he should draw up an EIN and "act like a separate business" to avoid paying taxes on items he needed to write papers for tenure at the university.
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Old 03-03-2011, 05:41 PM   #116 (permalink)
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Last item, you have been very clear so far

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I would suggest him starting to do freelance articles on the side - like you mentioned to he could do while on the clock.
Freelance trade magazine articles do not count for tenure and do not count much when the time comes to submit a proposal with an acedemic press. So the time is usually not spent writting them, even if they pay. When you get an acedemic article published, you have to sign a contract, it just doesn't come with a check. The article is then resold as a bundled subscription package with thousands of other articles and journals to universities. How is that any lesser than a 1000 word trade magaine article?

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After he signs his deal, and he is free to pursue other ventures he will be able to write expenses like this off all the time- and treat them based on how I mentioned earlier if he is an employee or a contractor
He has already published 4 books with paid contracts. Its the in between time where he has to do the 4-5 unpaid journal articles. Once those are done and show a good "impact score" he then shops around the book to the publishers he already works with. To be very specific, how does he write of the in between time when he is submitting the 4-5 unpaid articles, while also having a documented track record for 4 previous books?

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Old 03-03-2011, 05:45 PM   #117 (permalink)
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Last item, you have been very clear so far



He has already published 4 books with paid contracts. Its the in between time where he has to do the 4-5 unpaid journal articles. Once those are done and show a good "impact score" he then shops around the book to the publishers he already works with. To be very specific, how does he write of the in between time when he is submitting the 4-5 unpaid articles, while also having a documented track record for 4 previous books?
How was he paid for the 4 books? Contractor or employee? I'm going to guess he's a contractor as that's what the majority is.

If he's a contractor, he should have a self proprietorship that he's claimed income on for those 4 books he has written. Even if it's 4-5 years between income, he should still be able to do some freelance, earn some income he can report, and still write off his expenses. Then he should have a schedule C every year and report income for what he gets paid, expenses for his expenses, so on and so forth. If he's a contractor he's allowed to generate losses on his business. I'd still suggest doing in-between writings that generates him an income as a writer. Then the scenario is a moot point.
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Old 03-03-2011, 05:46 PM   #118 (permalink)
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Freelance trade magazine articles do not count for tenure and do not count much when the time comes to submit a proposal with an acedemic press. So the time is usually not spent writting them, even if they pay.
Do not count much for tenure, or do not count much to the IRS' view of trying to earn money by writing Two perspectives to consider.
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Old 03-03-2011, 05:54 PM   #119 (permalink)
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9 times out of 10 it's a hobby. Do you have a PC? Do you have memorabilia on display? Think of it this way. If the IRS comes to your house is there something that will lead them to believe you get personal enjoyment from sports cards? That's the easiest way to think about it.
I would argue that a lot of business owners DO get personal enjoyment from their business. That's the reason many of them go into business in the first place. I can give a zillion examples of businessmen and women who also show signs of "personal enjoyment" from it. In reality, the IRS is not going into homes to see if business owners are doing business in something they love.

At the end of the day, I think if a person logs all of their activity like a business, remits sales tax like a business, pays self employment tax like a sole proprietor, operates with a state vendor's license, and has significant activity on their schedule c, and a large inventory of product waiting for sale in their home, the IRS would have no problem accepting that as a business.

The only people who need to worry are the ones who make more than 20k on Paypal this year and have no paper trail, don't remit, state sales tax, and don't have a vendor's license. Everyone else will probably be just fine, whether you choose to look at your cards as a hobby, business, or investment.
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Old 03-03-2011, 05:55 PM   #120 (permalink)
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I understand what you are saying about the distinction.

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Do not count much for tenure, or do not count much to the IRS' view of trying to earn money by writing Two perspectives to consider.
So it seems the IRS has no means to properly classify people in said situation, so they are SOL on deductions even though they are doing transactions that would warrant a deduction under the exact same circumstances for another type of business?

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Then he should have a schedule C every year and report income for what he gets paid, expenses for his expenses, so on and so forth. If he's a contractor he's allowed to generate losses on his business. I'd still suggest doing in-between writings that generates him an income as a writer. Then the scenario is a moot point.
This process is set in stone. The book deal comes every 2-3 years, IF, he publishes 4-5 unpaid academic journal articles. He has done this 4 times already. It took about 8 years to get 4 books published. How is he to claim the in between years? He cannot get the book deal with paid trade magazine articles. He MUST do the 4-5 unpaid journal articles, there is no wiggle room. But they are expense none the less and the expenses must be paid to get the book deals every couple of years. Per your recomendation he can only claim the years he got the book deal, is that right? Are you saying he should just fill out the scheduel C every year with expenses and no paid work, just keeping the signed academic journals contracts on file if he gets audited. It would seem to me that if its required for tenure and required for a publishing deal, its deductable, individual paid contract or not.

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Old 03-03-2011, 05:56 PM   #121 (permalink)
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I would argue that a lot of business owners DO get personal enjoyment from their business. That's the reason many of them go into business in the first place. I can give a zillion examples of businessmen and women who also show signs of "personal enjoyment" from it. In reality, the IRS is not going into homes to see if business owners are doing business in something they love.

At the end of the day, I think if a person logs all of their activity like a business, remits sales tax like a business, pays self employment tax like a sole proprietor, operates with a state vendor's license, and has significant activity on their schedule c, and a large inventory of product waiting for sale in their home, the IRS would have no problem accepting that as a business.

^^^Agree wholeheartedly. 100%^^^

The only people who need to worry are the ones who make more than 20k on Paypal this year and have no paper trail, don't remit, state sales tax, and don't have a vendor's license. Everyone else will probably be just fine, whether you choose to look at your cards as a hobby, business, or investment.

^^^Disagree wholeheartedly. Agree with the paper trail part, etc but you need to worry regardless of the 20K rule.
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Old 03-03-2011, 05:57 PM   #122 (permalink)
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Radierguy10,

If a person is an independent contractor for a county agency, and also claims their baseball cards as a business, do they file two separate schedule C's, or does it all get filtered into one?
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Old 03-03-2011, 05:58 PM   #123 (permalink)
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I understand what you are saying about the distinction.



This process is set in stone. The book deal comes every 2-3 years, IF, he publishes 4-5 unpaid academic journal articles. He has done this 4 times already. It took about 8 years to get 4 books published. How is he to claim the in between years? He cannot get the book deal with paid trade magazine articles. He MUST do the 4-5 unpaid journal articles, there is no wiggle room. But they are an expense none the less and the expenses must be paid to get the book deals every couple of years. Per your recomendation he can only claim the years he got the book deal, is that right? Are you saying he should just fill out the scheduel C with expenses and no paid work, just keeping the signed academic journals on file if he gets audited. It would seem to me that if its required for tenure and required for a publishing deal, its deductable individual paid contract or not.
You become a sole proprietor - earn income doing small jobs and generate losses with your expenses. These losses will be offset in the years he gets paid for the books. He should have a Writer busienss and file Schedule C every year. Saving the journals is also a good idea for backup.
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Old 03-03-2011, 06:03 PM   #124 (permalink)
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One schedule c for each business
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Old 03-03-2011, 06:23 PM   #125 (permalink)
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I think this is it.

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You become a sole proprietor - earn income doing small jobs and generate losses with your expenses. These losses will be offset in the years he gets paid for the books. He should have a Writer busienss and file Schedule C every year. Saving the journals is also a good idea for backup.
So you are saying he must write paid trade magazine articles in order to offset and deduct for the unpaid stuff that "counts for tenure" and the pre-writting required for book deals? Essentially because there are no tax provisions for tenure track professors to deduct for thier unpaid academic writting expenses, which is required to keep thier jobs.
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