[Fmpro] Tax issue

[Pete]

I think Brad Heck might be the man to hire for this
job. He's an accountant who handles taxes AND a
composer. He would know best.

Pete


--- Mark Northam <markn at gmocorp.com> 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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