Selling What?

[erchess]

Some of you may be aware that there is a young woman who recently graduated from college with a lot of debt who is apparently going to sell her virginity through a legal brothel in Nevada. People are bidding and the highest bid so far is a quarter of a million dollars but there is also an interview process and supposedly the highest bidder will not necessarily win the auction because she also wants a nice person.

First, who would or would not prepare her return and why?

Second what is the proper tax treatment of this activity? Can a case be made for putting the income on F 1040 L 21 and not exposing it to SE Tax if indeed she only makes one transaction of this nature?

[DTS]

First, who would or would not prepare her return and why?

Second what is the proper tax treatment of this activity? Can a case be made for putting the income on F 1040 L 21 and not exposing it to SE Tax if indeed she only makes one transaction of this nature?

How the h**l can you be thinking of a tax return and the tax treatment on this one??? Are you nuts?

[les grans]

If she's selling what she says she's selling then she can sell it only once; not a trade or business! And I wouldn't do her tax return, because I'm looking for repeat clients.

[DTS]

Depreciation

Since she's the one with the commodity, and there will be depreciation, what type of property would this fall into?

My God, the write-offs are endless!

[Bees Knees]

From Wikipedia http://en.wikipedia.org/wiki/Prostitution_in_Nevada

Brothel prostitutes work as independent contractors and thus do not receive any unemployment, retirement or health benefits. They are responsible for paying Federal income tax and their earnings are reported to the IRS via form 1099-MISC. Nevada does not have a state income tax. The women typically work for a period of several weeks, during which time they live in the brothel and hardly ever leave it. They then take some time off. It has been argued that the tight control that brothels exert over the working conditions precludes the women from legally being classified as independent contractors.

Given enough publicity, this person just may cause the IRS to take note and audit the brothel's for treating employees as independent contractors. When you see the restrictions and regulations involved, these people should be treated as employees and the brothel's should be issuing W-2s.

It does not matter how many times she sells her services, it should be W-2 income to her.