|
Forums >
General Industry >
Barter TFP is taxable and must reported to the IRS
Barter TFP is taxable and must reported to the IRS.. Did you know Barter of services TFP"s must reported to the IRS? Im serious and found there is some new Rule with the IRP in effect this year. So im told if the Models session sells for $500 it has to be reported as such Sincerely Ron Blake Feb 10 06 08:59 am Link Ron B Blake wrote: who here is going to run and snitch??? Feb 10 06 09:03 am Link Ha Ha I agree and can relate But you know how a revengeful person can get>? cover your BUTT Its the IRS who wants there tax Money Sincerely Ron Blake Feb 10 06 09:05 am Link There's nothing new here. I collect eggs from my henhouse, trade a couple dozen to a neighbor for a pail of milk. We both just made $3 in the IRS view. I spend a few weekends helping a neighbor re-roof his barn. He spends an equal amount of time helping me pour a slab for a new garage. We both received $1000 income in the IRS view. Barter has been taxable for decades, and probably always will be. Just one more example of an immoral law. Luckiliy it's extremely hard to enforce. Feb 10 06 09:18 am Link I've never done TFP/CD. I shoot models out of the goodness of my heart and often give them a disc of images so they have their cherished memories for eternity. You could say it's my gift to them. Gifts under 10,000 are not taxable (didn't used to be), so the models don't have to worry about claiming them.  Feb 10 06 09:25 am Link hahaha, if anything when I tfp or "give a gift" I am actually out money, try as they like to enforce it and I'd be abe to claim a deduction. hahaha Feb 10 06 09:32 am Link Vegas Alien wrote: So then does it become tax deductible as a charitable donation...? Feb 10 06 09:53 am Link Ron B Blake wrote: Consult a tax professional before dispensing or heeding this kind of advice. If you would like to be a service here it would be more helpful to site the specific change or code. Feb 10 06 10:13 am Link Dan Howell wrote: My cousin is one, I got a nice return yesterday because of this business. Feb 10 06 10:18 am Link Hey just passing the word from what my tax CPA told me while preparing my 05 returns Best to check with yours since she told me of some bizarre and less then fortunate problems from other business. Sincerely Ron Blake Feb 10 06 10:21 am Link should i ask for a reciept from the stripper gal who gave me a lapdance??? Feb 10 06 10:35 am Link In theory, that may be true, but: Who will determine the value of the model's session? How about the photographers time, if he doesn't usually get paid for glamour work? I doubt there are many models or photographers, on here, that routinely command $500 for a session. All expenses associated with the shoot become deductible, including: Mileage to and from the location, Backdrops, CD's, paper, ink, photo development costs. Props, etc. Plus, you can depreciate equipment and depreciate or expense editing software. You could possibly expense the cost of photography magazines and related web-sites, or any classes that you might take. Models can deduct things such as make-up or hair spray used for the session, and, possibly, outfits that were purchased for the shoot. When you get all done, the tax liability is usually pretty minimal. However, individual circumstances differ and the tax treatment may also differ. I am a photographer and a tax professional. Feb 10 06 10:40 am Link Ron B Blake wrote: I am sorry, but your full of shit! Feb 10 06 10:44 am Link Blue Photography Studio wrote: Im sorry but you are and i can fax over a copy of the new tax rule if youd like Feb 10 06 10:46 am Link That it may be a reportable event and whether it would then be taxed is 2 different things. My "tax basis" for the barter, assuming it's worth $500.00 is $500.00. If the models "Time" and tax basis is $500.00, then we have made an even trade. An even trade is not a taxable event in most cases. If you trade a camera to a buddy for a lens of equal value....not a taxable event, etc. Consult you tax consutant. Mark Feb 10 06 10:46 am Link They also just passed a bill that will double the Taxes on a pack of cigarettes in Chicago effective March 1st 06 do your home work ,check with your state tax rule since situations vary from state to state Bottom line in Michigan it has to be documented and accounted for regardless of how it works out in end results. Sincerely Ron Blake Feb 10 06 10:56 am Link Ron B Blake wrote: Not making judgement but CPA's are not always correct. Check with the government web site and use there toll free number to double check some ideas from the CPA. I have found bad errors from various CPA's. Feb 10 06 11:02 am Link Mayanlee wrote: Thats a good question! But I bet we all know the answer to that, (unless of course your Enron) Feb 10 06 11:05 am Link In theory, if you have paid a model for a shoot, you need to issue her a form 1099, at the end of the year, so she can report the income to the IRS. How many photographers have actually done that? Feb 10 06 11:14 am Link Digital Magic of Carmel wrote: Not if she makes less than $400 a year you do not. Feb 10 06 11:16 am Link Digital Magic of Carmel wrote: I actually find myself reporting certain barter income on my tax returns every year. But the advice I see in this post seems to be the best there is. Whether a TFP is or is not reportable really depends on circumstances. Then you may end up filing a Schedule C and deducting all of the appropriate related expenses. In the end, the barter profit, which is all you care about might well be minimal. Feb 10 06 11:22 am Link So I have to send in some of this livestock I was paid in? Feb 10 06 11:29 am Link a photographer is not required to issue a 1099 if the payment was for less than $600, the model's annual income has nothing to do with whether a 1099 should, or should not be, issued. From a model's standpoint, any income that she receives should be reported, regardless of how much she earned, or whether or not she received a 1099 for that income. The income will generally fall into 1 of 2 categories--self employment income, or hobby income. In either case, tax law requires the income to be declared on the tax return. In either case, expenses associated with the income may be deducted, but, in the first case, the model may also owe self-employment tax. This assumes that the model has enough income from all sources and is required to file a return. Feb 10 06 11:33 am Link not if you value it under $500 !! Barter Positution is also often under $500 !! and what does the model report -- other than the photographer to the police ?? E L Feb 10 06 11:36 am Link BCG wrote: This is thought provoking, germane to the industry, and a pearl of wisdom? Feb 10 06 11:47 am Link Brian Diaz wrote: Life's Been Good Feb 10 06 12:11 pm Link Brian Diaz wrote: it a legitimate question for the resident irs expert...i am networking with new talent. Feb 10 06 12:19 pm Link It's a good thing that I don't sell the photos from TFP then....I'd be broke. Feb 10 06 12:21 pm Link It is good knowing this. I have been keeping track of what I spend TFP anyway because it always cost me to shoot tfp and I need to keep track of where my money is going, how much of it is going and whether it is really worth it or not. I'm wondering if I can include the time it takes me to process and edit the images for the model as well since if I didn't do it myself I would have to pay somebody else to do it; another legitimate business expense. Feb 10 06 12:31 pm Link Digital Magic of Carmel wrote: Hmmmmm, does that mean I can declare what I do to be a hobby and skip paying the self-employment tax. I am not sure I agree with you that there is such a thing as "hobby income." What I have seen is someone owning a business and consistently losing money. In that case the IRS would declare it to be a hobby, rather than a business and disallow the deductions. The theory would be if it is a hobby, they are not business expenses. Feb 10 06 12:31 pm Link To quote from the Ernst & Young Tax Guide "You must include on your return income from an activity from which you do not expect to make a profit. An example of this type of activity is a hobby or afarm you operate mostly for recreation or pleasure." Feb 10 06 12:35 pm Link DawnElizabeth Moderator wrote: your have riches that no soul on earth could take away. Feb 10 06 12:36 pm Link Actually, if you make any money from your hobby, you need to report it. And any expenses up to a certain amount from your hobby is tax deductible, so keep all your receipts. If it is a business....then you'll have to follow the rules set forth by the IRS in reporting income, loss of income and expenses. Keep in mind that if you paid out any monies for part time occasional help, that you plan to count as an expense, you need to send and fill out a 1099 form and report that as well. Honestly, go to the IRS website, they are smarter than I..... Feb 10 06 12:37 pm Link DawnElizabeth Moderator wrote: you are cuter than ANY irs agent...HEY...YOU could be the new face FOR the IRS. Feb 10 06 12:40 pm Link This isn't a news flash. Barter has always been considered compensation and is subject to normal tax liability. But do photogs and models report this? NO! Should they? DOUBT IT! If you factor in all the expenses incurreed versus the possible revenue generated, it's the tax payer getting screwed and not the IRS. The expenses are REAL, the compensation is a wash. Let's just bog down the IRS with a bunch of meaningless forms that in the long run have no real effect on anyone's income. Feb 10 06 12:42 pm Link Just about any kind of income you can imagine is taxable. That's not to say that people routinely report it. Here is another excerpt from the E & Y Tax Guide: "It is not necessary for the activity that produces income to be legal for the income to be taxable. Income from illegal activities, such as embezzlement, drug dealing, bookmaking, and bootlegging, is taxable. Al Capone, the notorious Chicago bootlegger during Prohibition, was convicted of income tax evasion because he did not report his illegal income. Embezzlement income is taxable in the year the funds are stolen. If the embezzler pays back the stolen funds in a later year, he or she can claim a deduction in the year of the repayment." So, yes, that prostitute is required to report her income, and I know of pro's who do file taxes. For tax purposes, they describe themselves as "entertainers". Feb 10 06 12:45 pm Link http://www.irs.gov/taxtopics/tc420.html Topic 420 - Bartering Income Bartering occurs when you exchange goods or services without exchanging money. An example of bartering is a plumber doing repair work for a dentist in exchange for dental services. The fair market value of goods and services exchanged must be included in the income of both parties. Income from bartering is taxable in the year in which you receive the goods or services. Generally, you report this income on Form 1040, Schedule C (PDF), Profit or Loss from Business. If you failed to report bartering income on returns you have already filed, you should correct this by filing an amended return, Form 1040X (PDF), for each year involved. For information on amended returns, refer to Topic 308. A barter exchange is any person or organization with members or clients that contract with each other (or with the barter exchange) to jointly trade or barter property or services. The term does not include arrangements that provide solely for the informal exchange of similar services on a noncommercial basis. The Internet has provided a medium for new growth in the bartering exchange industry. This growth prompts the following reminder: Barter exchanges are required to file Form 1099âB for all transactions unless certain exceptions are met. Refer to Barter Exchanges for additional information on this subject. If you are in a business or trade, you may deduct any costs you incurred to perform the work that was bartered. If you exchanged property or services through a barter exchange, you should receive a Form 1099-B (PDF), Proceeds from Broker and Barter Exchange Transactions. The Form 1099âB or other statement generally will show the value of any cash, property, services, credits, or scrip you received from the exchange during the year. The IRS will also receive the same information. If you receive income from bartering, you may be required to make estimated tax payments. Refer to Topic 355 for additional information. Additional examples of bartering, and information on how to report the income, are described in Publication 525, Taxable and Nontaxable Income. ------------ http://www.irs.gov/businesses/small/art … 37,00.html Barter Exchanges A barter exchange is any person or organization with members or clients that contract with each other (or with the barter exchange) to jointly trade or barter property or services. The term does not include arrangements that provide solely for the informal exchange of similar services on a noncommercial basis. The Internet has provided a medium for new growth in the bartering exchange industry. This growth prompts the following reminder: Barter exchanges are required to file Form 1099-B for all transactions unless certain exceptions are met. Under the exceptions, barter exchanges are not required to file Form 1099-B for: 1. Exchanges through a barter exchange having fewer than 100 transactions during the year. 2. Exempt foreign persons as defined in Regulations section 1.6045-1(g) (1). 3. Exchanges involving property or services with a fair market value of less than $1.00. 4. Transaction involving corporate members or clients of barter exchange may be reported on an aggregate basis. Forms 1099-B are due by February 28, 2006 (March 31, 2006, if filing electronically). Failure to file can result in significant penalties (Internal Code Section 6721). The penalty is based on when you file correct information return. The penalties are: * $15 per information return if you correctly file within 30 days (by March 30 if the due date is February 28): maximum penalty $75,000 per year ($25,000 for small businesses defined below). * $30 per information return if you correctly file more than 30 days after the due date, but by August 1; maximum penalty $150,000 per year ($50,000 for small businesses). * $50 per information return if you file after August 1, or you do not file required information returns; maximum penalty $250,000 per year ($100,000 for small businesses. Small businesses â lower maximum penalties. You are a small business if your average annual gross receipts for the 3 most recent tax years (or for the period you were in existence. If shorter) ending before the calendar year in which the information returns were due are $5 million or less. Additional information is available through the links below: * Electronic filing * Instructions on filing Form 1099-B * Form 1099-B * General Instructions for Forms 1099, 1098, 5498, and W-2G If you are a client, or member of barter exchange, and would like additional information on reporting income, consult one of the resources below: * Letter Dated 10/22/2003 to Bartering Exchanges (PDF) * Bartering Income Information * What to do if you haven't received a Form 1099 Note: This page contains one or more references to the Internal Revenue Code (IRC), Treasury Regulations, court cases, or other official tax guidance. References to these legal authorities are included for the convenience of those who would like to read the technical reference material. To access the applicable IRC sections, Treasury Regulations, or other official tax guidance, visit the Tax Code, Regulations, and Official Guidance page. To access any Tax Court case opinions issued after September 24, 1995, visit the Opinions Search page of the United States Tax Court. Studio36 Feb 10 06 12:47 pm Link |
