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Topic: Pros who pay for their own equipment |
Tom Callahan
From:
Dunlap, Tennessee, USA
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Posted 8 Feb 2004 3:18 pm |
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I was just wondering, of the players who make their living entirely by playing the pedal steel, What percentage of them actually pay for their equipment. Do they have to shell out for their steel, amps and misc. items they need to be able to fulfill their obligation. If so, just how do you go about writing off depreciation on the guitar and amps and such, and at what time does according to the tax laws does the equipment become absolutley worthless.
Say you own your gear for five or six years then turn around and sell it or trade it in on new, do you get penalized by Uncle Sam for getting more that your stated value of it on your tax returns.
Does it pay to keep an accurate account of strings, picks and other things purchased during the year.
[This message was edited by Tom Callahan on 08 February 2004 at 03:20 PM.] |
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chas smith R.I.P.
From:
Encino, CA, USA
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Posted 8 Feb 2004 5:04 pm
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I don't make as much of my entire income on music as I used to. I prefer to think that I'm semi-retired rather than semi-employed.
That being said, I paid for everything and it meant that I had to have the "tool" before I needed it and as fate would have it, some of the things I bought weren't as necessary as they seemed to be at the time. Then there were the "you know if you had a _______ we could do more work" and after I got a______, sometimes they called me back. So it can be a gamble, but then I got to play with a lot of cool stuff and I'm an incurable gear slut.
Ultimately it all comes off of the taxes. What it boils down to is simply, I don't get to keep a percentage of my income and I can either re-invest it into my business or I can pay it away to taxes. So the money that comes in from music gets re-invested into music related things and the money that comes in from fabricating things goes towards tools, when needed. |
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Earnest Bovine
From:
Los Angeles CA USA
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Posted 8 Feb 2004 5:17 pm
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| Quote: |
| Say you own your gear for five or six years then turn around and sell it or trade it in on new, do you get penalized by Uncle Sam for getting more that your stated value of it on your tax returns. |
There may be some collectible instuments that appreciate but they are rare. My philosophy has always been "buy high; sell low".
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Bobby Snell
From:
Austin, Texas
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Posted 8 Feb 2004 6:49 pm
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Please visit this site for info.
http://www.irs.ustreas.gov/index.html
Schedule C (profit/loss for business), Schedule SE (Self Employed Social Security tax), and for depreciation Form 4562. Most equipment is written off on a seven-year variable schedule.
Forms and pubs:
http://www.irs.ustreas.gov/formspubs/lists/0,,id=97817,00.html
Keep all receipts for strings, batteries, etc. for supply expenses to write off on a yearly basis.
[This message was edited by Bobby Snell on 08 February 2004 at 06:51 PM.] |
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Michael Douchette
From:
Gallatin, TN (deceased)
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Posted 8 Feb 2004 7:19 pm
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I've always paid for mine; that way, I don't feel indebted to anybody.
Mikey D... |
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John Bechtel
From:
Nashville, Tennessee, R.I.P.
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Posted 8 Feb 2004 10:22 pm
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There are many items which are tax-deductable, as a self-employed musician, including a certain portion of your home as Office-Space, Business LD Phone expenses +, Electricity, Misc. Supplies/Equipment, Business-Miles +, Road-Tolls, Food-Allowance, Even perks such as: taking the band to Dinner! You're usually well-off to itemize your deductions, but; keep your Receipts!!! I always did my Duty, but; I'm kinda glad that it's behind me now! I've been waiting for the Gov't to start taxing me for playing for FREE!
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“Big John” Bechtel
http://community.webtv.net/KeoniNui/BigJohnBechtels
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John Bechtel
From:
Nashville, Tennessee, R.I.P.
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Posted 8 Feb 2004 10:26 pm
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There are many items which are tax-deductable, as a self-employed musician, including a certain portion of your home as Office-Space, Business LD Phone expenses +, Electricity, Misc. Supplies/Equipment, Business-Miles +, Road-Tolls, Food-Allowance, Even perks such as: taking the band to Dinner! You're usually well-off to itemize your deductions, but; keep your Receipts!!! I always did my Duty, but; I'm kinda glad that it's behind me now! I've been waiting for the Gov't to start taxing me for playing for FREE! P.S. Add Show-Clothes to that list also!
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“Big John” Bechtel
http://community.webtv.net/KeoniNui/BigJohnBechtels
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Gene Jones
From:
Oklahoma City, OK USA, (deceased)
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Posted 9 Feb 2004 5:23 am
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...and in addition to all the above, I even deducted the subscription costs for occupationally related (music) publications and magazines and was never challenged by the IRS.....and of course Union Dues and Road Tax.
www.genejones.com [This message was edited by Gene Jones on 09 February 2004 at 05:26 AM.] |
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Mark van Allen
From:
Watkinsville, Ga. USA
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Posted 9 Feb 2004 9:52 am
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As Bobby posted, do the research. The government gives out all the information, though it may take some digging. The tax codes aren't specific about the "useful life" of musical instruments, but the consensus is they would fit the 7 year depreciation category. There is a specific recapture form used when you sell/trade something before it's been fully depreciated. As far as musicians and taxes, this is one place where we get our break! Literally everything you use is deductible. Effects, "amazing slow downers", microphones, amps, preamps, any proportion of computer gear used in your music business, get 7 year depreciation along with guitars. Music magazines, club dues, CDs, cords, entrance fees and parking at conventions and shows, hotels and taxis while on the road, any business phone calls, postage, and much more all come directly off the Schedule C profit and loss form. Recently the home office deductions have become more of a pain in the @ss, but still big $ off for those that do home business. One of the big ones is mileage. I still can't believe how many players I know who don't keep track of it- not just gigs, but going to the store to buy CDs, to the post office to mail promo packs, to the harware store to get spare parts, to the library to check out CDs, is all deductible. At last year's 35.5 cents a mile, my mileage deduction was over $8000. All it takes is a little book to write it down. Similarly, any out of town travel brings you a $35 a day meal allowance (which is totalled up and halved). That requires no record keeping other than what days you were out of town. One thing a lot of folks miss is the publication showing higher meal rates for many areas of the country, if you're traveling in those areas (most major cities) the rates are in the 42-62 dollar range. Just a few extra minutes with the daytimer and it's a few hundred more $ off. The only drawback to all this is it's hard for a CPA to know all the details of your personal situation, so you may have to do most or all of the work yourself. My taxes take me a long time each year. As far as the endorsements, I can't speak for the "famous folk", but I have been fortunate to work out endorsement deals with several of the companies whose gear I religously use (I don't have much respect for someone who "endorses" stuff they don't actually use), and in return for reduced cost to me, I show my gear off wherever I play. The steel world being such a small piece of the overall pie, I don't think the manufacturers can pursue the reams of give-away "endorsement" advertising that exist in the larger rock world. That being said, there are opportunities for local weekend players to get string endorsements and so on- some of the smaller companies are very supportive. Can't hurt to ask!
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Stop by the Steel Store at: www.markvanallen.com
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chas smith R.I.P.
From:
Encino, CA, USA
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Posted 9 Feb 2004 10:27 am
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| Quote: |
| ...and in addition to all the above, I even deducted the subscription costs for occupationally related (music) publications and magazines |
I write off CD's, tickets to concerts and movies, I even wrote off my tattoos, because one of them appeared on an album cover. |
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Gene Jones
From:
Oklahoma City, OK USA, (deceased)
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Posted 9 Feb 2004 11:43 am
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....I even wrote off my tattoos....
Chas, I never thought of that, but since mine says "Gene" (horseshoe & scroll with roses) maybe it would have been a legitimate deduction for self-promotion! 
www.genejones.com [This message was edited by Gene Jones on 09 February 2004 at 11:44 AM.] |
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Dave Ristrim
From:
Whites Creek, TN
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Posted 9 Feb 2004 4:09 pm
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As far as I know, there are no more "freebie" steel endorsments anymore. I am never afraid to ask for a discount, but am okay if the answer is no. Amps are another thing. Depending on the brand you may or may not to get one free if you play TV spots or are on a big tour putting said amp in the faces of thousands. The two companies that have been nice to me so far are Ernie Ball and Line6. I wouldn't take free gear unless I liked it in the first place and intended to use it. Let's face it though, Steel Guitar is not a high profile instrument.
Dave Ristrim |
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Jack Strayhorn
From:
Winston-Salem, NC
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Posted 9 Feb 2004 8:18 pm
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| In my 12 years at the Emmons Co. we never gave away a guitar. They do receive discounts that are at or near the cost of the instrument. These discounts do however include a handshake agreement that they are going to use the instrument especially in high profile situations. I do not know for fact but do believe that most manufacturers have the same procedures. |
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Roger Rettig
From:
Naples, FL
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Posted 10 Feb 2004 7:33 am
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I've just sent my figures off to my CPA in NYC who specializes in entertainers' accounts - it's well-worth the $200 in my view, as he doesn't (as far as I can tell) miss a trick.
Instruments are 'allowable' in terms of their depreciation, not purchase-price. I bought and sold a new steel last year - the small loss involved will be allowable.
RR |
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Tom Callahan
From:
Dunlap, Tennessee, USA
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Posted 10 Feb 2004 8:15 am
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So what the basis of all this is, if you see a guy playing a certain steel and using certain amps, then you can be 99% sure that those are the instruments of his choice and the ones he prefers.
Thank You all
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T.C.
Emmons S-10
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Gene Jones
From:
Oklahoma City, OK USA, (deceased)
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Posted 10 Feb 2004 8:19 am
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yep....at least 99% sure.....but there are always exceptions to every situation! Just like who gets paid and who doesn't, for playing on the Steel Shows!
www.genejones.com |
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Ron Page
From:
Penn Yan, NY USA
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Posted 10 Feb 2004 8:53 am
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On the tax question, you should be able to write off some or all of that cost in one whack, if I recall correctly it's call "Section 179 Expense". I think the limits on that have gone up considerably in recent years. You'll avoid having to depreciate the purchase over a number of years.
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HagFan
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chas smith R.I.P.
From:
Encino, CA, USA
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Posted 10 Feb 2004 10:22 am
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| Quote: |
| On the tax question, you should be able to write off some or all of that cost in one whack,.............. You'll avoid having to depreciate the purchase over a number of years. |
What my accountant does is look over the tally and write off some and depreciate the rest according to some "voodoo" calculation that only those guys know. |
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Chris Lucker
From:
Los Angeles, California USA
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Posted 10 Feb 2004 4:26 pm
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What are you guys doing when you have depreciated your item to a zero cost, but then sell it for more than zero dollars? Are you paying taxes on the profit (100%)? Or adjusting the basis of any new item you buy to replace that which you sold?
It seems like some sort of 1031 Exchange may be helpful for lucky musicians with closets full of Bigsbys and Push Pulls, let alone Telecasters and Stratocasters. |
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chas smith R.I.P.
From:
Encino, CA, USA
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Posted 10 Feb 2004 5:32 pm
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"What are you guys doing when you have depreciated your item to a zero cost, but then sell it for more than zero dollars?"
I just ship them off to the Cayman Islands, sort of. |
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Donny Hinson
From:
Glen Burnie, Md. U.S.A.
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Posted 10 Feb 2004 5:37 pm
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| Quote: |
| What are you guys doing when you have depreciated your item to a zero cost, but then sell it for more than zero dollars? |
Well, you could claim it as "miscellaneous additional (non-taxed) income", and just pay extra taxes. But if you're like most businessmen, you'll sell it for "cash"...and just pocket the money!  |
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Chris Lucker
From:
Los Angeles, California USA
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Posted 10 Feb 2004 10:31 pm
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| I was looking for a creative answer like Chas'. |
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