Tax questions

[RFactor]

I did not meet the $100 threshold to be paid by my one library I submit to, Getty Music, so I assume I don’t count it as income until the year I actually reactive it. I spent $2000 on music writing related software and a new DAW, and a new keyboard though. Should I still consider this a.business and write this off?
I have uploaded numerous compositions since the summer so I would hope it will show some income next year, but I am not sure how to handle this on my 2019 tax return. Any input would be appreciated.
I do have a second business as a music teacher and some times there is a bit of a crossover with me teaching students basic song writing, although not directly using my equipment. I kept them separate last year but am not sure how to handle this.

[Art Munson]

I did not meet the $100 threshold to be paid by my one library I submit to, Getty Music, so I assume I don’t count it as income until the year I actually reactive it. I spent $2000 on music writing related software and a new DAW, and a new keyboard though. Should I still consider this a.business and write this off?

You can’t write off more than your income in any given year. You might be able to depreciate once you have income. Then again I’m not an accountant so best to consult one.

[Michael Nickolas]

You can’t write off more than your income in any given year. You might be able to depreciate once you have income. Then again I’m not an accountant so best to consult one.

I think you can have enough write-offs to take a loss in any given year. I believe it’s after a few years of claiming losses that the IRS says this is a hobby and not a business. If you’re filing a schedule C as a music teacher I don’t see why to file a second schedule C as a music creator. Just combine all music income onto one schedule C, no? Like Art says ask an accountant and go forward from there!

[Music1234]

I think I agree with you Michael. Sole Proprietors take losses on their schedule C all the time as do S-Corporations, LLC’s. Just because you have a business or “side hustle” does not mean you can not show losses.

What if you earn 30K in royalties from music production work in a given year, but paid 40K to:
– rent a studio
-pay musicians fees to perform / sing on tracks
-Pay an accountant
-Pay for legal services
– Buy/ upgrade software and equipment to make the music
– Pay for airline tickets, ubers, taxis, and hotels to attend industry events ASCAP expo is coming up soon, PMA has a conference each year. MIDEM in France, NAB show in Vegas, NAMM Show just happened,….right?
– Pay internet, web design, web hosting fees
– Pay monthly Phone bills to run the business
-subscription fees to continue your education and knowledge of this business
etc.

We do have lot’s of overhead in our business.

[Art Munson]

If you’re filing a schedule C as a music teacher I don’t see why to file a second schedule C as a music creator. Just combine all music income onto one schedule C, no?

Duh, you are right Michael Nickolas! My accountant does something similar with my LLC (ah, these old brain cells).

[RFactor]

Thanks! Something to think about. If I combine I am safe from the hobby rule kicking in, which I was unaware of. I will run it past a CPA just to make sure.

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