Authors and Taxation

[Lyle]

A self-employed author wrote a travel guide to Las Vegas and in 2008 received a $4,500 advance on royalties. The author incurred expenses in 2008 directly related to the writing of this book. I have two questions related to this.

1. Is her $4,500 advance on royalties taxable when the advance is received or later when earned?

2. Whether or not the $4,500 is 2008 income may she deduct on a Schedule C her 2008 business expenses?


Lyle

[JG EA]

A self-employed author wrote a travel guide to Las Vegas and in 2008 received a $4,500 advance on royalties. The author incurred expenses in 2008 directly related to the writing of this book. I have two questions related to this.

1. Is her $4,500 advance on royalties taxable when the advance is received or later when earned?

2. Whether or not the $4,500 is 2008 income may she deduct on a Schedule C her 2008 business expenses?


Lyle

1. If a cash basis taxpayer counts now.
2. It depends. If the only book TP ever wrote then it doesn't go on a Sch C. But you said a self-employed author and so appparently already wrote other books. I would look at the rules for authors, because of capitalization. See TTB 5-17 for a discussion on this.

[DTS]

Some links for you.

I have recording and performing musicians that I need to allocate a lot of expenses for and found these links. The second one is about musicians, but I believe the treatment is the same and this example will be a good template for you to follow.

http://www.forwriters.com/taxes.html

http://www.howlandtax.com/articles/cdcosts.htm

Good luck.

D

[Possi]

Good links

Thanks for the links! Lots of information there~