[Fmpro] Tax issue

[Louis King]

this is pretty standard .... you can't deduct against royalties ....  
been like that for a long time yes ???

I remember my accountant telling me this 13 years ago


On May 1, 2008, at 4:12 PM, Mark Northam wrote:

> Hi All -
>
> Here's a nice happy post that is sure to cheer everyone up!
>
> I've been asked by a list member who doesn't want to reveal their  
> name to
> see if anyone has any info/advice on a specific composer related  
> IRS issue.
> Normally we don't do "anonymous" postings but I thought given the
> sensitivity of this matter it would be OK so I told the list member  
> I'd post
> this.
>
> The list member is currently being audited by the IRS. At issue are  
> ASCAP
> royalties. The IRS has taken the position that a composer may not  
> deduct
> business expenses from ASCAP royalty income UNLESS the expenses are  
> directly
> related to the production of the specific music that the royalty is  
> paying
> on.
>
> In other words, assume you write a piece of music in 2004. In 2007 you
> receive an ASCAP royalty for performances of that music. The IRS is  
> now
> saying that business expenses may not be deducted against that royalty
> income in 2009 since the production of the music was done in 2004.   
> The only
> exception seems to be if the business activity in 2007 you want to  
> deduct
> can be directly traced to a specific activity that specifically  
> markets the
> 2004 music, such as production of a CD, etc. But the IRS is telling  
> this
> FMPRO list member that if the deduction cannot be directly tied (with
> documentary evidence) to the original work, the royalty is a  
> "service" and
> ordinary deductions like ongoing studio expenses may not be taken  
> against
> it.
>
> Needless to say, the implications for composers and songwriters are  
> huge.
>
> Any thoughts or advice for our list member colleague?
>
> Best,
>
> Mark Northam
>
>
>
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