Book Author

[Jill Graff]

Client is writing an art-related book. Does anyone know a good resource for what writing expenses have to be capitalized?

Thanks in advance.

[Bees Knees]

TTB, page 5-18

One of the exceptions to the UNICAP rules is in the case of a
self-employed freelance author, photographer, or artist. Expenses
normally capitalized under UNICAP are deductible as current
expenses.

[Bees Knees]

Keep in mind UNICAP is the rule that requires an allocable portion of indirect costs to be capitalized. For example a manufacturing business allocating a portion of its utility bills to inventory.

For the direct costs, capitalization rules may still apply. For example, the author purchases a new computer. The cost of the computer is still subject to depreciation rules. Or the author self publishes and pays for the printing of 1,000 books to sell. The cost of printing must still be added to inventory and deducted through the cost of goods sold deduction.

It is the capitalization of indirect costs that the author is not subject to. Therefore, there really is no special situations you need to be concerned with. Treat the author like any other business client. Expense everything except for the obvious.

[Grumpy]

Client is writing an art-related book. Does anyone know a good resource for what writing expenses have to be capitalized?

Thanks in advance.

The attached file may be helpful for recording expenses incurred by a writer.