Forward/Return ratios, expenses, etc.

[andygabrys]

Im late to this thread, but found it very very instructive. one reason I clicked on it was that it was alluded to in last nights Taxi TV episode. Michael brought it up, and both Rob and Ron talked about it. Basically, they sniffed at the idea that $6000 is a lot to spend at an attempt to make it in music, If I understood their positions. Some quotes from their discussions:

Rob: "there's no way to hurry this stuff"
" this is a humbling business"
" I have to take things in God's timing" This is from an 8 time Grammy award winner... wow. (approximately 8, + or - maybe a few... but definitely more than he could count on one hand)

Regarding being able to deduct business expenses without making a profit: I agree with the previous posts recommending to get a better accountant. .......

I think this post is great input Tim - you bring a real world business perspective that is needed to balance out all of us doing it on the cheap. And its also a window into how big people go in other lines of work, and how big the stakes are.

Spending $500 per year to market your music, that you make for zero cost except for your time and a few thousand to get started with computer and software - that is definitely small potatoes in the big scheme.

But to Peter and everyone else's credit who do see it as big potatoes - you have to go for what you want.

And if you want it bad enough, make the sacrifices to get there. Whether that be time, money, stuffing your ego, reading self-help books, visiting your Guru on the mountain top - whatever.......

It's not right or wrong, just your decision. Nobody can make it for you. Asking around to see how other people do it in the short term does make it easier though........

[andygabrys]

And while we are at it:

http://www.facebook.com/DavidAvocadoWol ... 488451512/

If I am going to fall, I don't want to fall back on anything. I want to fall forward - at least I can see what I am going to hit

- Denzel Washington.

[RockChild56]

Regarding being able to deduct business expenses without making a profit: I agree with the previous posts recommending to get a better accountant.

My point, actual business expenses are deductable, whether you make a profit or not. if it is a real business venture.



Best regards to all.
Tim

Tim, I was pointing out that I would not try deducting if you were NOT making any Money.
If I could start a business and make no money (not profit, actual Income) whatsoever and deduct expenses against my regular Taxable Income for any period of time. I would Love that, however in reality, I would bet that I would find myself in Jail.
If anyone wants to try it You trust the IRS more than I do.
As for not making a profit I was told/warned that you need to become profitable within 5 years. I do believe the IRS has that as a rule.
In the businesses description of the business I have been in it says "Domestic For Profit".
I am not here to argue this is just from my experience. You and others have had a different experiences and I appreciate hearing what you have to say.

Good Luck to You and all in your future endeavors,

EJB

[mojobone]

It's a startup world, these days; Spotify and Pandora are two of the biggest streaming services on the planet and neither are profitable, as of yet. YouTube is, I believe, still operating at a loss, but backed by Google's other profitable enterprises. I think the idea that you must become profitable within a given timeframe is probably...dated.

[RockChild56]

It's a startup world, these days; Spotify and Pandora are two of the biggest streaming services on the planet and neither are profitable, as of yet. YouTube is, I believe, still operating at a loss, but backed by Google's other profitable enterprises. I think the idea that you must become profitable within a given timeframe is probably...dated.

Believe and do what you will, You don't have to listen to me.
I was just trying to add to the information pool.

http://www.bizfilings.com/toolkit/sbg/t ... ction.aspx

http://mywifequitherjob.com/is-your-bus ... f-the-irs/

http://www.irs.gov/uac/Is-Your-Hobby-a- ... ndeavor%3F

[mojobone]

http://www.bizfilings.com/toolkit/sbg/t ... ction.aspx

It would appear, according to this, that a musician/writer/engineer who's working Taxi's five-year plan and attending Rallies would meet most of those qualifications, but consider me schooled, in that I wasn't aware there was an actual form you could file to put off having the IRS make a determination.

For me, it's not been much of an issue, because I haven't earned any non-music income in a decade or two.

http://mywifequitherjob.com/is-your-bus ... f-the-irs/

The key, and I am not a lawyer, is that while you have to report all the income, because that helps your case, you can sometimes choose whether a purchase is a business or a personal one; for example, I bought a 1965 Fender Super Reverb, this year, and I won't be deducting it, even though I may use it to make money. The business doesn't own it, so if I get sued or go under, I don't have to liquidate it; it's mine, lol. This is why Sweetwater Sound sends out an annual email around Christmas about taxes-well Sweetwater doesn't, some of the sales engineers take it upon themselves. Some might consider this a little dodgy, and yes, there's undoubtedly some risk, but apparently there are quite a few pros who do an annual spend-down around that time of year, just so they don't have to show too much profit. Obviously, that's not gonna work for someone who makes most of their money from something other than music.

* ADDENDUM and having said all that, you still need to consult an actual accountant, because the rules can be different for a an LLC, an S-corp or a proprietorship.

[mojobone]

How many hours and how much creative energy (brain power) does it take to produce one submission worthy piece of music?
How many submissions does it take to get a forward?
How many forwards does it take to get a deal?
How many deals does it take to generate any income?
How much income do you need from all those deals combined to earn enough money to make your living writing music?
How long will it take until the total income from music writing equals the amount you need to live?
How can you supplement your music business income - and do you have the perseverance to keep working at it, learning from your mistakes, and improving - until you do?

Were those rhetorical questions, Mike?

[Paulie]

Still the IRS may not take it so well if you do that and deduct expenses with NO INCOME. Even with Income you Must become profitable within 5 years or the the IRS can and probably will shut you down.

So when will the IRS shut down the US government?

[Paulie]

Find me at the Rally, Paulie, and I'll stand you to a round. (at least) Us sax players should stick together.

Count on it.

[Len911]

It's a long story, but after the crash when I was left penniless, the same week the IRS paid me a visit, it was in the news that GE had their most profitable quarter ever and paid nothing in taxes. I remember him asking me how much cash I had on me, and pulling my wallet out to show him. I remember asking him jokingly if he wanted my shirt. With that and the corporate bailouts, Citibank, my mortgage provider included, though not me,lol, has pretty much convinced me that Marx was correct to question the system.

My CPA was honest and straight, so was I. I didn't write off any questionable deductions. I still wouldn't, even though the system is obviously broken.

Probably if I was so relentless in paying less or none at all in taxes, I'd consider becoming a minister, or renting an office or mail box in Ireland, I hear there's one empty next to Apple!