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    #1

    Artist Tax Return

    Just got a new customer that is a artist. He does sculptures. First time doing a tax return for a artist but from my reading they can be different.

    First he is a S-Corporation. Pays himself a small salary. He brought by his deductions. Two stand out to me that I need to decide on.

    1. He paid a certain percentage of the house payments out of his business. So he is saying he can deduct 30% of the mortgage interest because he has a studio built onto the house.
    To me I don't think this is deductible on his S-Corp. The out come will be about the same if he deducts it on his Schedule A mortgage interest.

    2. He had a "sculpture" garden built in the back of the studio part of the house. It cost about $5,000. He does display his sculptures there and has clients come by to see his work.
    I think this would be depreciated over 15 years since this is an improvement to land. Landscaping. Also it can not deducted off in one year through section 179.

    Does this sound correct to you guys? Just need a little backup on this one that I am going the right direction.
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    #2
    Agree with you on number two

    Originally posted by geekgirldany View Post
    Just got a new customer that is a artist. He does sculptures. First time doing a tax return for a artist but from my reading they can be different.

    First he is a S-Corporation. Pays himself a small salary. He brought by his deductions. Two stand out to me that I need to decide on.

    1. He paid a certain percentage of the house payments out of his business. So he is saying he can deduct 30% of the mortgage interest because he has a studio built onto the house.
    To me I don't think this is deductible on his S-Corp. The out come will be about the same if he deducts it on his Schedule A mortgage interest.

    2. He had a "sculpture" garden built in the back of the studio part of the house. It cost about $5,000. He does display his sculptures there and has clients come by to see his work.
    I think this would be depreciated over 15 years since this is an improvement to land. Landscaping. Also it can not deducted off in one year through section 179.

    Does this sound correct to you guys? Just need a little backup on this one that I am going the right direction.
    Don't know about number one -- maybe one of the corporate geekers can help......

    Interesting folks -- those artistes, aren't they? I once had a client who was a neighbor to William Faulkner in Mississippi (used to eat supper over at the house occasionally).

    Comment

      #3
      Sounds like rental income

      to be offset on Sch. E by actual costs and depreciation.

      Comment

        #4
        Artist Tax Return

        Why should the fact that your client is an Artist be any different than any other business person that provides personal services from an S corp? Rules are the same regardless of occupation.
        Uncle Sam, CPA, EA. ARA, NTPI Fellow

        Comment

          #5
          Many years ago I had an artist for a client (in my Block days). But he was a Schedule C business, so he could deduct a portion of his expenses for his studio/office.

          The recommendation was made in an earlier post that for a s corp to pay any expenses there should be a written agreement in the corporate minutes that the corporation will reimburse the shareholder/employee for a portion of the expenses of the home upon proof of payment of these expenses.

          This is what I did for one S corp this year.

          Linda F

          Comment

            #6
            Prior Discussion

            On #1 - Maybe this will help you, see prior discussion at http://www.thetaxbook.com/forums/sho...rest+deduction

            Sandy

            Comment

              #7
              Yeah that was what I thought about it being no different from a regular S-Corp. Just that the studio being separated from the house might make a difference. Like what was discussed on another thread which Lynda mentioned.
              (http://www.thetaxbook.com/forums/sho...?t=4091&page=2)

              The easy way is from the S-Corp to reimburse him for the expenses. This hasn't been done. The previous accountant wrote off the interest and utilities directly off the S-Corp return. I believe the interest was put under Rent on the S-Corp return. I will have to ask about this. I could go ahead and do it as Rent but I will not be preparing his invdivdual return so I do not know if he will tell them about it or not. Result would be S-Corp deducting interest, report it on Sch E as rental income, and then deduct off the mortgage interest on Schedule E. I think I need to look at his personal return from last year.

              BB these artists are something. They definately have a ummm way to them. This fellow is a pretty popular bronze sculpture artist.

              Comment

                #8
                Oh you beat me Sandy! Was just reading on that and then posted it in my response here. I even mentioned the guy writing out his mortgage interest payments from the corporation in that thread.

                I think I might go with RJM's post from the previous thread on this.

                Although I ususally don't. I like doing the reimbursement from an accountable plan.

                Comment

                  #9
                  Artists

                  Had a prospective client come in several years ago. A Sculpture. He had taken a trip
                  to Colorado to visit different gardens and look at the art to get different ideas.
                  Wanted to deduct the cost of the trip. Told him I could not do it. He left and went
                  elsewhere.

                  Comment

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                  This message board allows participants to freely exchange ideas and opinions on areas concerning taxes. The comments posted are the opinions of participants and not that of Tax Materials, Inc. We make no claim as to the accuracy of the information and will not be held liable for any damages caused by using such information. Tax Materials, Inc. reserves the right to delete or modify inappropriate postings.

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