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Topic: How to deduct samples libs from your taxes?

  1. #1

    How to deduct samples libs from your taxes?

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    I\'m doing my taxes and I\'m not sure how to categorize sample libraries. Supplies...that\'s about all I see that\'s close. Any suggestions?

  2. #2

    Re: How to deduct samples libs from your taxes?

    If you are self-employed...(1099s or cash) and using the Schedule C...Check out section 179 expense (form 4562). You can get the form and instructions on irs.gov in PDF format to print out.

    It\'s a form of depreciation (which is what I\'d think you need to do with your sound libs), that allows you to expense the total cost (given certain limitations) in the current year. Any amounts not allowed under that year can be carried over to the following year. I think the limit is like 20k, but also limited by your income (ie..you can\'t expense off more than you made). (but, you can write it down to zero and carry over the remaining amount to the following year).

    There are rules about which \"asset\" types can be decpreciated under sec 179. There are rules about using this decduction. You must keep a written record of date it was placed in service (or bought) and a full description of it along with it\'s total cost. And you must keep in that written record, how much you elected to expsense using 179, any remaining balance so forth. Just use a log book or note book you keep with your tax stuff. Usually, you\'ll write most stuff off within 2 years (or have it completely expensed out). But, the IRS requires you keep such a log for 179 expense items.

    When you fill out 4562, use a generic description of the type of item it is you are expensing. You \"can\" group certain things bought in around same time. For instance...my monitor, computer, printer, etc..all purchased as part of \"one\" computer.
    I list such things as \"electronic equiopment\" on the 4562 description. Leave the details for your Log...should have serial numbers etc in there too.

    \"supplies\" are wearable items...and usually low cost things. You might consider your replacement cables supplies (unlesss you are talking about a PA snake that cost a lot of money) under supplies. Paper for your printer. Consumables. etc. Printer cartridges. Items generally under 100 dollars.

    Hope that helps

  3. #3

    Re: How to deduct samples libs from your taxes?

    I believe that soundware/libs would probably be considered by the IRS as a form of \"software\" for computer. if that helps you any.

  4. #4

    Re: How to deduct samples libs from your taxes?

    Damn it... I may have to go to an accountant. I\'m using TurboTax Premium Home & Business, but I\'m still confused on how I should file this stuff. I don\'t want to make any mistakes.

    I think I found where to add sample libs in TurboTax.. under assets. And I added a sample lib and got to the Section 179 deduction, but get this.. sample libraries fail the eligibility requirement: The property must be tangible personal property, like computers, office furniture or cars. Well.. sure the libs come on CDs/DVDs..but.. it\'s not really a tangible item once you install it. Plus, you\'re actually paying for a license, not the product itself.. so.. what\'s the deal exactly?


  5. #5

    Re: How to deduct samples libs from your taxes?

    OK, did a bit more digging.. there are asset classifications such as machinery & equipment, land improvements, etc. Sample libraries either fall under classication K (computer software) or L (intangibles). Now, operating systems fall under class L. But other software doesn\'t? I don\'t get it..

  6. #6

    Re: How to deduct samples libs from your taxes?

    Good discussions here. I am filing as a home business for my music stuff for the first time as well. ANy more tips are appreciated.

  7. #7

    Re: How to deduct samples libs from your taxes?

    Just don\'t list it as \"licensing fees\" - you\'ll attract attention!

  8. #8

    Re: How to deduct samples libs from your taxes?

    Sam, I think you can safely list it as computer software. That\'s essentially what it is. The other alternative may be tools, because it is one of the tools of your profession. Either way I think you\'ll be fine.

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