Making the Trumpet a "Business" - Page 2

trpt2345 · 07-16-2006, 12:49 PM

Quote:

Originally Posted by brian moon

Quote:

Originally Posted by Alex Yates

All of this is fine and dandy, but the most important ingredient is to make sure there is documented income generated by this business. ;-)

When I entered grad school, I had reportable income from freelancing the previous years. Since Eastman billed our tuition and our applied lessons separately, I was able to write off thousands of dollars in applied fees for each semester. That came to a pretty hefty total, so I was happy about that.

Good point Alex. No income no business. It's propbably not a good idea to start your first year with a $10,000 loss. That is asking for trouble.

Rules dictate that a business that you claim cannot show a loss for three years running and still be considered a business. However, if the the adjusted gross income (income minus deductions) falls below $400 you don't pay any tax at all. My theory has always been it's better to buy Stuff than let the gummint get your money. In either case you don't have the money but if buy deductible Stuff (instruments, equipment, whatever) at least you have the Stuff and the IRS doesn't get your money.

Michael McLaughlin

"It's too darn hot!"

Cole Porter

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