writing a children's book

[oceanlovin'ea]

What pub is it that discusses expenses for literary writers?

Client is writing a children's book. She paid an illustrator $5000 to do the illustrations for the book in 2012. Book is not finished yet. Maybe it will be by end of this year or early next year.

Need to find out if the $5000 has to be amortized over a period of time. Or if it is expensed during 2012 even though there is no income from the book yet.

Getting down to wire here.

Thanks

Linda, EA

[BOB W]

READ THIS: http://www.publishlawyer.com/carousel8.htm


A Special Tax Rule for Writers
Book authors often face special problems regarding business expenses. You may work on a book - incurring large expenses - years before your receive a contract or any income from which the expenses can be deducted. Does this mean you lose these deductions in the current year? Nope -- not since 1988, when Congress exempted authors and artists from the Uniform Capitalization Rules (26 U.S. Code Section 263A(h)), requiring the matching of expenses with income. What that means is that an author does not have to "capitalize," or accumulate, his project costs to be deducted in a future year, when the income is received. Instead, you are allowed to deduct your project costs in the year they are incurred.

[oceanlovin'ea]

Perfect

That link was just what I needed.

Thank you so much.

Linda, EA

[BOB W]

Some of the link is out dated, but not for your question. "Like home office rules has changed over the years."

[LCP]

READ THIS: http://www.publishlawyer.com/carousel8.htm


A Special Tax Rule for Writers
Book authors often face special problems regarding business expenses. You may work on a book - incurring large expenses - years before your receive a contract or any income from which the expenses can be deducted. Does this mean you lose these deductions in the current year? Nope -- not since 1988, when Congress exempted authors and artists from the Uniform Capitalization Rules (26 U.S. Code Section 263A(h)), requiring the matching of expenses with income. What that means is that an author does not have to "capitalize," or accumulate, his project costs to be deducted in a future year, when the income is received. Instead, you are allowed to deduct your project costs in the year they are incurred.

.....very interesting. Does the pub give any guidance re qualifying as an "author" in the first place. I've incurred all kinds of costs over the last many years related to books that I might just write some day.

Looks like I missed out.....and I'm wishing I hadn't filed my return yesterday !

[BOB W]

Looks like the only condition that exists is the hobby loss rules. The article covers that issue. Reread that area. It is the last paragraph.