Writing off gear?

Discussion in '35mm Cameras' started by Carlo Coggi, May 22, 2006.

  1. Carlo Coggi

    Carlo Coggi Guest

    I am an advanced amateur photographer and will be taking an 'extreme
    adventure' vacation this summer. A friend of a friend is editor of a
    well-known travel magazine who heard about my somewhat unique vacation
    and said that the magazine would be interested in seeing a spec
    article/photos about the trip.

    Business/Tax Question:

    Two months ago I sold my Canon 10D and bought a 30D and some related
    camera gear. If my photos and text are accepted for publication, can I
    then form a sole proprietorship or corporation and *retroactively*
    write-off the cost of my gear and trip?
    Carlo Coggi, May 22, 2006
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  2. You need to ask a tax advisor about this. Any advise offerred here is not
    valid, and in fact, can be of legal consequence.

    Having said that, I suspect, that the only way you can write any of your gear
    off is if you purchased it solely as part of your business. There are a lot
    of rules and regulations in tax law that limit your ability to do this, so you
    really need to see a tax advisor or financial advisor on this subject.

    Personally, if this is just a 1-up venture, then just take the income and pay
    your taxes and be happy you got the chance to earn a few extra dollars on your
    Thomas T. Veldhouse, May 22, 2006
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  3. The points made by Thomas are good. However, the chance of you making
    enough to make it worthwhile to pay for professional advice are remote,
    so you may find the following helpful. You may find the available
    expertise is greater than you think, but you will have to use your own
    judgement as to the credentials of the respondent*.

    In any question involving the application of any branch of law, it is
    essential to state the jurisdiction in which you reside. Tax law will be
    very different in the various countries of the world.

    In the UK, expenses may only be deducted in computing the profits of a
    business if they are incurred "wholly and exclusively" for the purposes
    of the trade. Under some circumstances it may be acceptable to apportion
    the expenses if they are partly for trade use and partly private. I
    would guess that the rules are likely to be similar in many

    The way you have expressed the question - "will be taking an extreme
    adventure vacation" - rather makes life difficult for you; you had
    already decided to take the holiday for private enjoyment, and the
    opportunity to make a little on the side arose later.

    The system of giving credit for equipment will probably be a little
    different. In the UK, there is a system called capital allowances which
    does allow partial allowances for assets used for both trade and
    personal purposes. In the US, it is called tax depreciation, but I do
    not know what the personal use rules are.

    Keep a careful record of the expenses, and if the tax authorities of
    your country are helpful it may be worth discussing the position with
    them (it should at least be free). It may be you can make a case for
    sufficient expenses to be deducted, or capital allowances/tax
    depreciation to be given to at least cover the receipts.

    *In my case, 20 years as a tax professional in the UK. Though I have not
    practised as such for a few years, the basic principles in this area do
    not change much. Nevertheless, I only offer it as general guidance. Tell
    us which country you live in and you may get some more specific advice.

    David Littlewood, May 22, 2006
  4. He posts from Road Runner in New York City or the vacinity ... so your answer
    is the US I believe. Either way, if you bought the camera for personal use
    and plans to use it for personal uses after his extreme adventure, then
    basically a very very small portion of the camera would apply for business
    use. In general, I advise not trying to dodge the IRS for a couple of extra
    bucks. What is the most you can save on a 30D and accessories? At a 20% tax
    rate you might save $400? Is that worth forming a company and risking the
    wrath of the IRS because of its pseudo legitimate nature (if the system was
    used 5% of the time for business in practice, then that is only $20!).
    Thomas T. Veldhouse, May 22, 2006
  5. Carlo Coggi

    Paul Furman Guest

    I write off 50% of my auto expenses, phone, internet, computer & camera
    gear as business expense but I'm almost entirely self employed. The
    better practice is to depreciate the equiptment so you write off some
    percent each year based on the expected decrease in resale value as it
    ages. But my numbers aren't that big so I don't worry too much. My tax
    guy is OK with this. I think you'd need to show more than one assignment
    to justify the creation of a business... like a web site selling photos
    & a resume & all that. You don't need to incorporate, sole proprieter is
    Paul Furman, May 22, 2006
  6. Carlo Coggi

    Alan Browne Guest

    It depends where you are and what the tax code says.

    Here (Quebec) you can incorporate and transfer used capital equipment
    declared at a reasonable market value on the day of incorporation and
    then depreciate that value at 20% per year (for 5 years) as long as it's
    in the company.

    For registered (non-incorporated) entities I'm not sure.

    Travel costs under any business are costs, period.

    For any of the above to be useful, you have to make more money than
    expenses, of course.

    Forming a company for the sole purpose of avoiding personal taxes is not
    usually legal.
    Alan Browne, May 22, 2006
  7. Ah yes - it is usually US resident posters who don't think it necessary
    to say where they live!
    Which is why I suggested discussing it with them. However, from what I
    recall being told by my one-time US opposite numbers, the IRS is not
    exactly a user-friendly organisation.

    I certainly don't think it would be advisable to form a company, which
    would be much more complex and expensive. Sorry, should have made that

    David Littlewood, May 22, 2006
  8. Carlo Coggi

    Bill Hilton Guest

    Carlo Coggi writes ...
    Assuming you're in the US you have two options once you rake in some
    bucks thru your photography ... one option is to declare the income as
    'hobby income' and report it on (I think) line 21 of your 1040, then
    you can declare expenses *up to that amount* (but not over) if you
    itemize deductions. If you do not itemize deductions then you have to
    report as income the full amount. Google on 'hobby income photography'
    or similar for specifics. There's quite a bit of useful info on this
    on the web, including IRS publications.

    The other option is to declare a "business" for your photography, in
    which case you file a separate form listing all your income, expenses,
    depreciations etc. You can have a loss here and use it to off-set
    other earned income, BUT (gigantic but) you need to be able to
    demonstrate you are running this like a business and trying to make a
    profit, not using it as a tax write-off. If doing this option you
    should consult a tax attorney since using photography as a tax
    write-off is something the IRS lads look for and it could easily
    trigger an audit if you have several years of low income and high
    expenses leading to losses applied to other earned income.
    In both of these scenarios you can write off the costs of the trip if
    you sold an article about it (if hobby income, can only write off
    expenses up to the amount of income) but in neither of these scenarios
    could you write off any gear you sold earlier before you took the trip
    or decided you were a "business".

    If you make a lot from selling a story about the trip it's worth
    consulting an accountant but if it's under a few thousand dollars it's
    simpler to report it as hobby income unless you'll be doing this often.

    Bill (not a tax attorney so consult one before blindly following this
    advice, but I've researched this issue before ...)
    Bill Hilton, May 22, 2006
  9. Wow, that's a very useful provision. Wish we had one like it here!

    David Littlewood, May 22, 2006
  10. Not only not legal, but very hard to do....I tried it many years ago....the
    IRS will soon find you out, and call it a "Hobby" and not allow you to
    deduct anything for it. they know it's a hobby, as soon as you go a couple
    of years in a row without making a taxable profit.....Anyone who continues
    in business at a loss is really operating a hobby, and not a business. If
    you break even, then they will leave you alone. If you make a profit, and
    don't pay them any taxes on it, they may still leave you alone, until they
    audit you and find out, but if you operate at a loss, and try to get money
    out of them, then watch out....That's where they draw the line...:^)
    William Graham, May 22, 2006
  11. Carlo Coggi

    Jerry L Guest

    Income tax write-offs: generally, if you have income to buy equipment,
    you must also put the income into your income taxes. That includes a
    sum of $$$s for self-employment taxes and social security taxes. If,
    after gifting the I.R.S. some of your money, the I.R.S. is kind, you
    may be able to 'write-off' a portion of your equipment. The travel
    part of your trip is a different story __ adding to the fact that you
    hope to 'be a business' after the spending for a cruise trip.

    You need to find a good tax accountant and listen to what he/she has to

    Good luck!
    = = =
    Jerry L, May 23, 2006
  12. The answer to his question is *NO* he can't. If he bought this equipment
    for personal use, which he did, then he is stuck. If he bought the
    equipment to be used for his "photography" or "eBay" business than it is
    figured into the equation. Of course, he will also be able to back up all
    claims if/when he gets audited.

    I agree, consult an accountant.

    Rita Ä Berkowitz, May 23, 2006
  13. Yes. The key to his statement above is, if he has an income to begin with,
    then he may be able to write the equipment costs off on it. but if he is
    operating a hobby, then there is no income to write anything off against.
    first, you have to earn something using your equipment, then you can write
    off it's cost. If you make your living as a tinker, tailor, or candle stick
    maker, then you can't write off your cameras against your income, even if
    you do make an odd dollar or two from your pictures. You can only write off
    your photographic equipment against income you earn through photography.
    William Graham, May 23, 2006
  14. Carlo Coggi

    Randy Howard Guest

    Rita Ä Berkowitz wrote
    Incorrect. If he decides to formulate a business after the
    initial purchase, he can transfer the assets into the company
    and treat them as any other capital equipment expense made after
    the formation. The IRS doesn't employer mind readers yet,
    AFAIK. Whether a sole proprietorship, partnership or a
    corporation, you can acquire assets prior to the creation of the
    entity and transfer or sell them to the 'business' at a later
    Always good advice.
    Randy Howard, May 23, 2006
  15. Of course he can do *anything* if done correctly and properly worded, but he
    is walking a fine line with this one. He really needs to get a plan
    together and figure out what he wants to do then take this to a competent
    accountant. Going by the OP's initial post of what he's trying to
    accomplish would be more of a detriment to him and possible create more
    hardship. For instance, just depreciating the equipment. Was it bought
    last month, last year, or 10-years ago? And as I said earlier, " If he
    bought the equipment to be used for his "photography" or "eBay" business
    than it is figured into the equation. Of course, he will also be able to
    back up all claims if/when he gets audited." In his case as described, the
    benefits don't outweigh the risks, so I'll say stick with no.

    Rita Ä Berkowitz, May 23, 2006
  16. If I were to start a photography business, I could "sell" my photographic
    equipment to the business, but not at the new price....I would have to price
    it at the current market's used rate....I could however, begin depreciating
    it starting at that price.
    William Graham, May 23, 2006
  17. Carlo Coggi

    cjcampbell Guest

    Hmmm, cross-posted quite a bit and not enough information to give a
    reasonable reply.

    But assuming your question is legitimate (not a troll), then my guess
    is that any tax savings are probably not worth the trouble. If you are
    not going to save enough to make hiring a good tax advisor worth while,
    why bother?
    cjcampbell, May 23, 2006
  18. Carlo Coggi

    Pat Guest

    One does not necessarily "form" a sole proprietorship. In New York,
    one goes to the county clerk's office and files a "Certificate of Doing
    Business Under an Assumed Name", pays a fee, and that's about it. This
    is generally known as a DBA (Doing Business As". But for the OP, not
    even that is necessary. This is only necessary if you are going to
    advertise or be paid under an "assumed name", for exampe "World Tours
    Photography" as opposed to just having a check made out ot "Carlo
    Coggi". For a DBA, you use your Social Security Number instead of a
    EIN. This has a few advantages. First, all of the income/taxes are
    reported on your personal income tax form. Second, if you file for a
    EIN, you come under the juristiction of the state labor department
    because of the potential of having employees.

    If you are using "Carlo Coggi Photography" as your name, argueably, you
    don't need a DBA because you don't have an assumed name, but it sort of
    depend on your your bank interprets it. No one else really cares,
    except maybe another Carlo Coggi.

    If you file a DBA, then you need to open a separate bank account in
    that name, which is a pain for only 1 transaction.

    If the income is a one-shot deal, or even a reasonable number of
    transactions, just have the checks made out to you and use your own
    SSN. In this case, you don't have to do anything at all, unless your
    local municipality requires it (but what are the chances that they find
    out on a 1-time deal).
    Pat, May 23, 2006
  19. Carlo Coggi

    Ace Guest


    If and when you declare any income from this adnventure you will have
    the opportunity to declare any expenses. Simple as that.
    I would do it all on a Schedule C, and submit it along with the Form
    1040 or whatever you file with your regular personal income tax return.
    Really no biggie.

    Bob AZ
    Ace, May 24, 2006
  20. Carlo Coggi

    Greg Hansen Guest

    I've added an accounting newsgroup to the list.

    It sort of seems like asking, if you sell some stuff at a garage sale,
    whether you can write off the initial purchase price of those items as a
    business expense.
    Greg Hansen, May 24, 2006
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