[Dixielandjazz] 1099's

Tue Feb 21 12:35:20 PST 2006

There are other items that are also deductible, expense items as well,

Donated services are deductible as Promotion and Advertising  at the 
amount of your regular fees for such a performance, which if handled 
properly on the books reduces the tax liability for a paid gig of the 
same amount.

Insurance,  Union Dues, Travel, hotel, meals, drinks,

Utilities/Telephone/Fax/ mobile phone, a portion of your home utilities 
in proportion to your in home office  deduction

Musicians can also be called Subcontracted services,  or musicians Fees,

Commissions Paid to agents,

Printing, Postage, Free Cds given out as promotional items seeking gigs 
etc.

Radio Station Cds are deductible as advertising and promotion expenses.

Never pass up a Free Bar or restaurant  cash receipt from your or any 
other table that might be left behind, can't have too many of them.  
Even though the IRS says you don't need them for anything under $25.00. 
 trust me keep them.

Repairs on your band vehicle, and instruments, even your stereo which 
you need and your VCR for making video copies for promotional use.

Art work Graphics, for your Cds.

And most importantly:   That Recording Master that you produced, is 
Sec. T-38 Deductible Personal Property with a twelve year life span.   
Good for 20% the first year and 10% a year for the next 10 years,  put 
out a series of them and you don't have to worry much about taxes as 
the depreciation wipes out most of your income.

Do not forget to put together a business budget to make those CDS,  and 
include Studio Time, Tapes, Engineer fees, Producers fees, (you)  
Manufacturing costs, Mastering,Photography, Graphics costs, arrangers 
fees, songwriters royalties, and anything else relating to it including 
the pizza and Beer at the sessions.   Just submit a reasonable bill and 
contract yourself or who ever does each task and defer the payment for 
such services to be paid back in the form of a royalty on each CD sold 
and Paid for in the future, which recoups the cost of producing the CD 
project and reduces the tax liability on all the sales.

Why do you think the major record labels are so rich?   84% of all the 
records they release are tax write offs against the ones that sell 
billions of dollars worth.  :))    The best kept secret in the 
Entertainment industry.   And ten Movie industry is ten times worse.

Treat it Like  Business and the IRS will finance your band while you 
struggle to become successful, and all these things will apply if you 
indeed treat it like a business and not a hobby,  helps reduce any tax 
liability you might have from any other sources such as salaries, 
interest income capital gains etc.

It is Legal to AVOID TAXATION  and only Illegal to EVADE TAXATION>

I have been audited Six Times guys and have never lost yet.   Because I 
do my homework, declare EVERY DOLLAR I make in income as well as every 
dollar I spend.   I have never had a problem spending more than I make 
especially when I have sidemen. :))

Those who think you are getting away with something by not claiming the 
cash income are being foolish, they do often come after musicians  We 
are on the HOT LIST for audits like bartenders and waitresses because 
they know we get a lot of cash gigs, and they are wise to the fact that 
many of you don't declare the income.    That is how they tried to nail 
me six times, because some guy who paid me cash claimed it and they 
were just sure I did not "WRONG" and I even asked a Federal Tax 
Attorney they sent out to California from Washington to they an nail me 
where he thought the guy got the number to deduct that he had paid me?  
  He said the guy had no contracts and no canceled checks or receipts, 
and that he was basically a non bookkeeper,  :))

Lucky for both of us I did keep the books and had all the proof they 
could not refute, which saved both of us a lot of grief and penalties 
and fines and taxes that we did not owe.

Play by the rules and you can usually beat the pants off of them.   But 
go look at the rules and don't necessarily play by their interpretation 
of the rules which are written and understood by them like all other 
small businesses, we are different and have specific write offs and 
situations far outside the scope of what most of them are trained to 
look for.   Know your stuff and stand your ground.   Insist upon 
getting an auditor who has actually audited someone in the Music 
Industry before or you will get some dumb kopf looking to make a name 
for himself by intimidating you into making a settlement offer and 
giving them money you probably do not owe.

I like to open an audit with a friendly statement: Hi so nice to meet 
you, Wow I bet you hate your job huh ?  nobody invites you to parties 
or over to hang out at their barb ques etc.  well I want to make this 
as easy for you as I can sir/maam  I have all my records and document 
here to back up my return and you won't need to spend a lot of time 
because everything is professional and in order.  I have done you job 
for you.   Whatever you are looking for I am certain is here.  Start 
with the Bank Statements that is what they want to see because they are 
looking for unclaimed income deposits first and foremost. :))  Get that 
out of the way and the rest is just a fishing expedition.

Bye the way,  they also have no records available on you past three 
years prior to the current year, so your records are important should 
you get picked on for a back audit situation, yes keep the stuff for 
seven years since it can be the only thing they have to go on and if 
your books are clean then you have nothing to worry about.   Just don't 
be afraid of them and stand up and look them in the eye and fight for 
every deduction you claim and justify it to them.

Cheers,  and happy filing.

Tom

-----Original Message-----
From: Steve barbone <barbonestreet at earthlink.net>
To: DJML <dixielandjazz at ml.islandnet.com>
Sent: Tue, 21 Feb 2006 12:54:38 -0500
Subject: [Dixielandjazz] 1099's

    If, for example, you run a 15 piece band and the total band income 
you
report is less than $20,000, you should have absolutely no trouble at 
all
zeroing out to no taxable income whether or not you issue 1099's to the
members.

Possible Schedule C deductions include:

15 men at $550 per man per year =   $  8250 in salary deductions.

Office in Home deduction of at least$  3500

Mileage expenses of at least        $  4000

Expenses/supplies at least          $  2000

Depreciation incl.  sec 179         $  1500

Entertainment                       $   250

Uniforms etc.                       $   500

TOTAL Expenses                      $20,000

Taxable music income -0- with no need to file 1099's on anyone.

Just one possible scenario. In most cases such as the above, the IRS has
bigger fish to fry than sticking you with a tax tab of a few thousand
dollars. Unless they can justify their own time/money spent on the case,
they do not bother with us small fry.

On the other hand, if you have a five piece band and one major employer,
that you do 100 gigs for e.g. Showboat Casino, you are going to get one 
HUGE
SIX FIGURE 1099. In that case, you better damn well issue 1099's to the 
band
members. This is never any trouble as the guys all are very glad to be
working steady and they have similar write-offs to the above, excepting 
the
salary deduction.

Cheers,
Steve

_______________________________________________
Dixielandjazz mailing list
Dixielandjazz at ml.islandnet.com
http://ml.islandnet.com/mailman/listinfo/dixielandjazz