Judge rules against IRS and for Doc Filmmaker at DVinfo.net

Richard Alvarez · April 21st, 2012, 09:30 PM

Interesting article about doc filmmaking, and the IRS. The take-away, keep good business records.

Documentary Filmmaker Wins Closely Watched Tax Dispute With IRS - Deadline.com

Finn Yarbrough · May 24th, 2012, 03:33 PM

The other take-away is... try to make money. I do my own books, and I don't claim all of the deductions that I could because I am afraid that my business could be perceived as a tax-shelter, too. Probably a proper accountant would tell me that's dumb, but an accountant would charge more than I pay in taxes! My rule is, when I make less money, I claim fewer fringe deductions (like mileage, per diem, business use of the home, etc.)

Allan Black · May 24th, 2012, 07:39 PM

Interesting up beat, her next production will probably be a doco called 'Class Action"

Cheers.

Don Bloom · May 24th, 2012, 08:38 PM

Quote:

Originally Posted by Finn Yarbrough

The other take-away is... try to make money. I do my own books, and I don't claim all of the deductions that I could because I am afraid that my business could be perceived as a tax-shelter, too. Probably a proper accountant would tell me that's dumb, but an accountant would charge more than I pay in taxes! My rule is, when I make less money, I claim fewer fringe deductions (like mileage, per diem, business use of the home, etc.)

You might be opening yourself up to IRS scrutiny. I'm not an accountant but my current one has been doing my taxes for many years and was and IRS agent before he found the light.
You can show a loss from business for up to 3 years before the IRS would no longer consider your business a business but a hobby in which case many of the legit deductions would go away. Of course if your business loses money for more than 3 years there are other problems than just not being a profitable business. Having said that, I think your doing yourself a disservice by not using an account who is familiar with home based businesses because many of the deductions that one might think don't mean anything can and do. Back in the 70s when I got started in home based business, the IRS really didn't have any knowledge of how to treat it so they looked at everything. Today HBB is so common place and the rules are very much like a store front business. A percentage of the home or aptartment so long as it is used exclusively for business. Anything that has to do with shooting or editing be it a camera a piece of software, batteries for your audio gear, mileage from your place of business to the job and back...the list is long. You might want to reconsider your business. Is it a business in the true sense of the word or a hobby (an expensive one) that you make some occassional money with?
Not trying to start anything but if it's a business you should take advantage of all the legit deductions you can.
Just sayin'!

Pete Bauer · May 24th, 2012, 10:30 PM

Don, I'm a bit confused by your critique. To my mind, being careful about taking only definitely legit deductions is an entirely different matter from "hobby vs business," at least for small and/or upstart production companies that aren't yet able to keep an accountant on staff or regular retainer.

As I read your post, it seems you're of the impression Finn is trying to masquarade a hobby as a business, whereas I take his post just the opposite: he's serious enough about his business to be safely conservative about claiming deductions while advocating that one should "make money" ie be profitable.

I do think we can all agree, though, that as onerous as it is, yup, keep excellent records!

Don Bloom · May 25th, 2012, 04:50 AM

Pete, actually I agree with you. I see him as sometimmes taking legit deductions and sometimes not depending and the need. Perhaps I'm wrong. In any case keeping excellent records is part of the equation. The other part is being consistent with them. Specifically the home office deduction. The space, phone, internet, officie supplies, heat, electric, water. That shouldn't change but a few dollars in any given year and the IRS likes consistantsy.
Again, I don't read the OP as trying to hide anything I just think he's doing himself a dis-0service by not taking advantage of all the legitimate deductions that are available unless he considers what he does as a hobby and not a business. We all want to make money but if we show a loss due to legit home office or mileage it's a paper loss. As long as the net money is in the bank I'm fine with showing a loss. (I can't do that anymore but I wish I could sometimes)
Anyway, to each his own I guess. The IRS rules, regs and deductions are there for all and for the using. Up to each of us how far we use them.

Dale Guthormsen · May 27th, 2012, 06:57 PM

Tax people are wicked.

I kept accurate records, had an accountant to verify my deductions were ligitimate. I wanted to be straight above board. We were audited, no big deal I thought.

I got a letter back that I owed 500 dollars as |I wrote off to much for my power. they thought I used my house meter when my working building on my premises had its own meter.

I sent them a copy of all bills produced by the power company.

They repayed me by auditing 5 years back, said I had thousands of dollars due from illigitimate deductions (not true). I said well I gues we will have to go to court, They said Pay Now or we will succond your house and we will see you in court in two to five years.

It was a criminal act but bottom line |I had to take a loan to pay it back and after that could not afford to take them to court.

I was talking to a big business briend of mine. |Here was his advice!!!

Take every deduction that is even close to a deduction.
File your taxes.
If they write back and say you owe them two thousand dollars, Smile, apologise and pay it
Knowing that you took ten thousand somewhere else.

I Believe that is the best advice i ever received.

After spoending a month in Africa \i swore \i would never complain about taxes again!!

Allan Black · May 27th, 2012, 07:10 PM

That's tough Dale and you're right about Africa.

If they're that difficult to deal with, not sure I'd criticise them on a public forum.

Cheers.

Dave Blackhurst · May 28th, 2012, 12:02 AM

It's all relative, and I'll hope that was the "Cana-jun" tax people? I've found that the IRS folks I've dealt with are actually pretty decent folk (considering how insanely complex the tax code is, it's a tough job!), as long as you treat them with respect and decency, and if you're in the "right" and can prove it, you'll be OK. Admittedly if you're talking about an obscure part of the voluminous tax code, it may take quite a while to "prove", and if it's a marginal or disputed issue, it's probably not even worth it... There ARE taxpayer advocates, at least here in the US, in case things do get out of hand.

FWIW, one bit of advice I've heard is to take all the deductions you are entitled to, but keep back a few you COULD take, and in the case of an audit, come out with them owing you for those additional deductions. Audits are supposed to be a paying proposition, designed to "catch" additional revenue not being reported... a "zero change" audit or one that slightly favors the taxpayer doesn't meet the criteria.

As long as you show you keep good books, pay what you believe you should, and maybe a little less, you'll be less of a "target" - the tax authorities are looking for "cheaters", make sure you aren't one (or at least don't look like one) in case you DO get audited. Good accurate books and conservative tax preparation go a long way in case a question comes up later!

April 21st, 2012, 09:30 PM	#1
Richard Alvarez Inner Circle Join Date: Sep 2002 Location: San Mateo, CA Posts: 3,840	Judge rules against IRS and for Doc Filmmaker Interesting article about doc filmmaking, and the IRS. The take-away, keep good business records. Documentary Filmmaker Wins Closely Watched Tax Dispute With IRS - Deadline.com

May 24th, 2012, 03:33 PM	#2
Finn Yarbrough Regular Crew Join Date: Nov 2010 Location: Ferrisburgh, VT Posts: 179	Re: Judge rules against IRS and for Doc Filmmaker The other take-away is... try to make money. I do my own books, and I don't claim all of the deductions that I could because I am afraid that my business could be perceived as a tax-shelter, too. Probably a proper accountant would tell me that's dumb, but an accountant would charge more than I pay in taxes! My rule is, when I make less money, I claim fewer fringe deductions (like mileage, per diem, business use of the home, etc.)

May 24th, 2012, 07:39 PM	#3
Allan Black Inner Circle Join Date: Sep 2006 Location: Sydney. Posts: 2,932	Re: Judge rules against IRS and for Doc Filmmaker Interesting up beat, her next production will probably be a doco called 'Class Action" Cheers. __________________ Drink more tap water. On admission at Sydney hospitals more than 5% of day patients are de-hydrated.

May 24th, 2012, 10:30 PM	#5
Pete Bauer Wrangler Join Date: May 2003 Location: Eagle River, AK Posts: 4,100	Re: Judge rules against IRS and for Doc Filmmaker Don, I'm a bit confused by your critique. To my mind, being careful about taking only definitely legit deductions is an entirely different matter from "hobby vs business," at least for small and/or upstart production companies that aren't yet able to keep an accountant on staff or regular retainer. As I read your post, it seems you're of the impression Finn is trying to masquarade a hobby as a business, whereas I take his post just the opposite: he's serious enough about his business to be safely conservative about claiming deductions while advocating that one should "make money" ie be profitable. I do think we can all agree, though, that as onerous as it is, yup, keep excellent records! __________________ Pete Bauer The most beautiful thing we can experience is the mysterious. It is the source of all true art and science. Albert Einstein Trying to solve a DV mystery? You may find the answer behind the SEARCH function ... or be able to join a discussion already in progress!

May 25th, 2012, 04:50 AM	#6
Don Bloom Inner Circle Join Date: Jan 2003 Location: Chicago, IL Posts: 6,609	Re: Judge rules against IRS and for Doc Filmmaker Pete, actually I agree with you. I see him as sometimmes taking legit deductions and sometimes not depending and the need. Perhaps I'm wrong. In any case keeping excellent records is part of the equation. The other part is being consistent with them. Specifically the home office deduction. The space, phone, internet, officie supplies, heat, electric, water. That shouldn't change but a few dollars in any given year and the IRS likes consistantsy. Again, I don't read the OP as trying to hide anything I just think he's doing himself a dis-0service by not taking advantage of all the legitimate deductions that are available unless he considers what he does as a hobby and not a business. We all want to make money but if we show a loss due to legit home office or mileage it's a paper loss. As long as the net money is in the bank I'm fine with showing a loss. (I can't do that anymore but I wish I could sometimes) Anyway, to each his own I guess. The IRS rules, regs and deductions are there for all and for the using. Up to each of us how far we use them. __________________ What do I know? I'm just a video-O-grafer. Don

May 27th, 2012, 06:57 PM	#7
Dale Guthormsen Inner Circle Join Date: Jun 2005 Location: Saskatchewan Posts: 3,048	Re: Judge rules against IRS and for Doc Filmmaker Tax people are wicked. I kept accurate records, had an accountant to verify my deductions were ligitimate. I wanted to be straight above board. We were audited, no big deal I thought. I got a letter back that I owed 500 dollars as \|I wrote off to much for my power. they thought I used my house meter when my working building on my premises had its own meter. I sent them a copy of all bills produced by the power company. They repayed me by auditing 5 years back, said I had thousands of dollars due from illigitimate deductions (not true). I said well I gues we will have to go to court, They said Pay Now or we will succond your house and we will see you in court in two to five years. It was a criminal act but bottom line \|I had to take a loan to pay it back and after that could not afford to take them to court. I was talking to a big business briend of mine. \|Here was his advice!!! Take every deduction that is even close to a deduction. File your taxes. If they write back and say you owe them two thousand dollars, Smile, apologise and pay it Knowing that you took ten thousand somewhere else. I Believe that is the best advice i ever received. After spoending a month in Africa \i swore \i would never complain about taxes again!! __________________ DATS ALL FOLKS Dale W. Guthormsen

May 27th, 2012, 07:10 PM	#8
Allan Black Inner Circle Join Date: Sep 2006 Location: Sydney. Posts: 2,932	Re: Judge rules against IRS and for Doc Filmmaker That's tough Dale and you're right about Africa. If they're that difficult to deal with, not sure I'd criticise them on a public forum. Cheers. __________________ Drink more tap water. On admission at Sydney hospitals more than 5% of day patients are de-hydrated.

May 28th, 2012, 12:02 AM	#9
Dave Blackhurst Inner Circle Join Date: Feb 2007 Location: Apple Valley CA Posts: 4,874	Re: Judge rules against IRS and for Doc Filmmaker It's all relative, and I'll hope that was the "Cana-jun" tax people? I've found that the IRS folks I've dealt with are actually pretty decent folk (considering how insanely complex the tax code is, it's a tough job!), as long as you treat them with respect and decency, and if you're in the "right" and can prove it, you'll be OK. Admittedly if you're talking about an obscure part of the voluminous tax code, it may take quite a while to "prove", and if it's a marginal or disputed issue, it's probably not even worth it... There ARE taxpayer advocates, at least here in the US, in case things do get out of hand. FWIW, one bit of advice I've heard is to take all the deductions you are entitled to, but keep back a few you COULD take, and in the case of an audit, come out with them owing you for those additional deductions. Audits are supposed to be a paying proposition, designed to "catch" additional revenue not being reported... a "zero change" audit or one that slightly favors the taxpayer doesn't meet the criteria. As long as you show you keep good books, pay what you believe you should, and maybe a little less, you'll be less of a "target" - the tax authorities are looking for "cheaters", make sure you aren't one (or at least don't look like one) in case you DO get audited. Good accurate books and conservative tax preparation go a long way in case a question comes up later!