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(Minnesota Public Radio)   Minnesota Dept. of Revenue says artist owes thousands in back taxes because she didn't work hard enough to make a profit and enjoyed her work too much   (minnesota.publicradio.org) divider line 93
    More: Asinine, Minnesota, tax collectors, Department of Revenue, back taxes, assistant commissioner, state auditor, rock musics, debts  
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10539 clicks; posted to Main » on 29 Jul 2013 at 12:18 PM (1 year ago)   |  Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



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2013-07-29 10:58:34 AM
The Twin Cities has such a vibrant art community.. it's a shame the government wants to kill it.
 
2013-07-29 11:03:30 AM
Laws are law.
 
2013-07-29 11:19:54 AM
And if she didn't claim the $20,000 in income she made, they would call her a professional and cite her for tax evasion.
 
2013-07-29 11:55:38 AM
So Michele Bachmann *was* Andy Kaufman this whole time!
 
2013-07-29 12:22:22 PM
I'm going to side against him/her based solely on his/her name.
 
2013-07-29 12:24:54 PM
I have been there. Royalties were taxed around 30% for what is effectively the sale of 'property.' I considered it an expensive hobby so I didn't have to pay pro insurance rates.

As for profits--- good businesses have no profit. They reinvest for growth.
 
2013-07-29 12:26:41 PM
FTFA: De Mars does not have a day job. She makes about $20,000 a year entirely on her music, painting and other artistic endeavors and considers herself a professional artist.
Then...
De Mars vigorously disputes any notion that she is not a professional.

So, between professional and gender, this person is truly confused.
 
2013-07-29 12:27:41 PM

Lenny_da_Hog: And if she didn't claim the $20,000 in income she made, they would call her a professional and cite her for tax evasion.


"It" probably makes money on the entertainment aspect of her "job" and not the pieces of art. You can't deduct "work" expenses for a hobby of which you are not making a continual profit. It would appear the art work is just that a hobby as the paintings don't bring in enough revenue to cover expenses thus it's not a business.

The entertainment does bring in enough revenue to cover expenses but not the painting. You can't claim to be a musician and then deduct art expenses. It's like being an architect and deducting plumbing expenses on your own home.
 
2013-07-29 12:27:56 PM
Wow that is some bizarro shiat.  How much did investigating, interviewing, auditing her cost?  And then she can pay less if she agrees to not sue them?  What the hell?  Who wins here?
 
2013-07-29 12:27:57 PM

Lucky LaRue: The Twin Cities has such a vibrant art community.. it's a shame the government wants to kill it.


To be fair, this is more likely a policy/decision set by a single low level or middle manager then a firm plan by the state government.
 
2013-07-29 12:28:23 PM

LlamaGirl: Laws are law.


Laws are laws, and are what petty bureaucrats interpret them to be.
 
2013-07-29 12:29:56 PM

Kirzania: FTFA: De Mars does not have a day job. She makes about $20,000 a year entirely on her music, painting and other artistic endeavors and considers herself a professional artist.
Then...
De Mars vigorously disputes any notion that she is not a professional.

So, between professional and gender, this person is truly confused.


I don't see a contradiction here.
 
2013-07-29 12:30:32 PM

Lenny_da_Hog: And if she didn't claim the $20,000 in income she made, they would call her a professional and cite her for tax evasion.


That was my initial thought. I got caught by New Mexico because I sold a dog house I built for $100. I only had to pay $20 to make it up, but they considered that $100 earned income.
 
2013-07-29 12:30:32 PM
Good. Think about the drain on society this person is. Everyone needs to contribute.

And "she"?
 
2013-07-29 12:31:06 PM

filter: I have been there. Royalties were taxed around 30% for what is effectively the sale of 'property.' I considered it an expensive hobby so I didn't have to pay pro insurance rates.

As for profits--- good businesses have no profit. They reinvest for growth.


This is true, but you can't have continual NOL's for 10 years and be a "business". It can still be a hobby you just can't take the NOL.
 
2013-07-29 12:31:55 PM

Kirzania: FTFA: De Mars does not have a day job. She makes about $20,000 a year entirely on her music, painting and other artistic endeavors and considers herself a professional artist.
Then...
De Mars vigorously disputes any notion that she is not a professional.

So, between professional and gender, this person is truly confused.


She considers herself a professional and vigorously disputes the notion that she is not a professional. Is that still confusing to you?
 
2013-07-29 12:32:23 PM
I'll bet on appeal she's an artist.
 
2013-07-29 12:32:31 PM

blahpers: I don't see a contradiction here.


Fark double negatives.
 
2013-07-29 12:32:36 PM

Thunderpipes: Good. Think about the drain on society this person is. Everyone needs to contribute.

And "she"?


boxxy.jpg
 
2013-07-29 12:35:55 PM

LlamaGirl: Laws are law.


Thanks Dredd.
 
2013-07-29 12:36:57 PM
thurstonxhowell:

She considers herself a professional and vigorously disputes the notion that she is not a professional. Is that still confusing to you?

Some people are just dense.

What the person was trying to say (not me) was viz:

A. She's confused because she's a guy who thinks she's a girl.
B. She's confused because she's an amateur who thinks she's a professional.

So she's doubly confused.
 
2013-07-29 12:37:34 PM

r1niceboy: Lenny_da_Hog: And if she didn't claim the $20,000 in income she made, they would call her a professional and cite her for tax evasion.

That was my initial thought. I got caught by New Mexico because I sold a dog house I built for $100. I only had to pay $20 to make it up, but they considered that $100 earned income.


I've always been told that people with bring home incomes of $20,000 pay nothing in taxes... Have I been lied to all this time?
 
2013-07-29 12:38:34 PM
images.publicradio.orgunfilteredpop.files.wordpress.com
 
2013-07-29 12:38:37 PM
I'mokwiththis.jpg
 
2013-07-29 12:38:58 PM

r1niceboy: Lenny_da_Hog: And if she didn't claim the $20,000 in income she made, they would call her a professional and cite her for tax evasion.

That was my initial thought. I got caught by New Mexico because I sold a dog house I built for $100. I only had to pay $20 to make it up, but they considered that $100 earned income.


Technically $80 is earned income, you could deduct the $20 as hobby expenses. If you don't file a schedule A then all of it is income.

Gross income means all income from whatever source derived unless specifically excluded by the good people of the IRS.
26 USC §61.

Don't fark with the Tax Man because he farks you back, hard.
 
2013-07-29 12:40:05 PM

wotthefark: The entertainment does bring in enough revenue to cover expenses but not the painting. You can't claim to be a musician and then deduct art expenses. It's like being an architect and deducting plumbing expenses on your own home.


Yeah, you're right. You can only pick one genre. Because that's a thing. Like how Madonna gets taxed double when she does a movie and when Nikki Six got audited for writing The Heroin Diaries.
 
2013-07-29 12:40:08 PM
Does he have a business license for the venture?
 
2013-07-29 12:40:26 PM

filter: I have been there. Royalties were taxed around 30% for what is effectively the sale of 'property.' I considered it an expensive hobby so I didn't have to pay pro insurance rates.

As for profits--- good businesses have no profit. They reinvest for growth.


I call troll - reinvested profits are still profits and reinvestment does not make them something else.
 
2013-07-29 12:44:52 PM

r1niceboy: Lenny_da_Hog: And if she didn't claim the $20,000 in income she made, they would call her a professional and cite her for tax evasion.

That was my initial thought. I got caught by New Mexico because I sold a dog house I built for $100. I only had to pay $20 to make it up, but they considered that $100 earned income.


How the fark did you get "caught"? Does NM have roving sting operations buying shiat of craigslist just to see if the seller declares stuff on their taxes? Or did you do something dumb like call and ask permission for some damn thing thust putting yourself on "their" radar?
 
2013-07-29 12:45:13 PM
DAMN GUBMINT TRYING TO SHUT DOWN SMALL ENTREPRENEURS WITH ITS TAXES!
 
2013-07-29 12:45:23 PM
There once was a wo/man from Venus...

/ Oh you sexy hermaphrodite lady-man-ladies
// with your sexy lady bits
/// and your sexy man bits too
//// Even you must be in to you ooo ooo...
 
2013-07-29 12:46:13 PM

Kirzania: FTFA: De Mars does not have a day job. She makes about $20,000 a year entirely on her music, painting and other artistic endeavors and considers herself a professional artist.
Then...
De Mars vigorously disputes any notion that she is not a professional.

So, between professional and gender, this person is truly confused.


claims she's a professional, and disputes notions that she is not a professional.  Are you missing the double negation in the second item there?   The two things are not inconsistent; they are very similar.
 
2013-07-29 12:47:44 PM
Hearing Accountant Dad's voice in my head: "If, for too many consecutive years, you write off more than you earn on your self-employment, then it's not a job, it's a hobby."
 
2013-07-29 12:51:23 PM

Lenny_da_Hog: And if she didn't claim the $20,000 in income she made, they would call her a professional and cite her for tax evasion.


I'm guessing that's $20,000 in gross revenue.  Then he's deducting expenses that more than offset that resulting in no tax liability.
 
2013-07-29 12:53:39 PM

the8re: Hearing Accountant Dad's voice in my head: "If, for too many consecutive years, you write off more than you earn on your self-employment, then it's not a job, it's a hobby."


This.  It's common knowledge for anyone who owns a very small business.  The government doesn't want you writing off expenses for your hobbies under the guise of a failing business.
 
2013-07-29 12:54:09 PM
Someone took "men are from Mars, women are from Venus" waaaaay too much to heart.  She's a Venusian from Mars - get it? >.<

So many weird transgender people out there... =/  It's still not right to call her "he" or "it", though.

/transgender
//weird in other ways
///only changed her first name to a very normal name
 
2013-07-29 12:55:56 PM
RembrandtQEinstein:
r1niceboy: Lenny_da_Hog: And if she didn't claim the $20,000 in income she made, they would call her a professional and cite her for tax evasion.

That was my initial thought. I got caught by New Mexico because I sold a dog house I built for $100. I only had to pay $20 to make it up, but they considered that $100 earned income.

How the fark did you get "caught"? Does NM have roving sting operations buying shiat of craigslist just to see if the seller declares stuff on their taxes? Or did you do something dumb like call and ask permission for some damn thing thust putting yourself on "their" radar?


No good deed goes unpunished... I assume the vast majority of cash transactions between individuals go wholly unnoticed by the state.  In these days of gov't austerity I can't imagine they pay someone to contact every single CL or kijiji seller and tell them they have to pay taxes (only to be told "I changed my mind and gave it to him for free, and you can't prove otherwise").
 
2013-07-29 12:59:58 PM
It is pretty simple. If something is done with the expectation of earning a profit, it is a business and appropriate expenses can be deducted. If something is done without the expectation of earning a profit, it is not a business and you don't get to claim business expenses.

Minnesota is saying that the lack of time commitment is evidence it is not being done with the expectation of profit. It is a question of facts that a court can determine the outcome of.

As for the "blackmail" accusations. The DoR offered a settlement because court cases are expensive and even when they are clearly in the right there is risk. It is the same reason DAs usually offer settlements to people charged with crimes.
Yes, some times it is used to force a settlement, but there is no evidence this is anything but standard practice in this case.
 
2013-07-29 01:00:02 PM

the8re: Hearing Accountant Dad's voice in my head: "If, for too many consecutive years, you write off more than you earn on your self-employment, then it's not a job, it's a hobby."


Yep, I got nailed for this after three years of running a "business".
 
2013-07-29 01:00:09 PM
This is kinda interesting.  Since no one knows ahead of time that they're going to consistently make a profit, the IRS only requires a good faith effort at profitability, although being able to argue you have a reasonable expectation of profit in the future helps.  Under the IRS rules, then, someone who lived off their work for years and sustained that effort, even if they went through a multi-year slump in profitability, wouldn't have their status as a professional questioned.

Clearly Minnesota has different guidelines.  The article mentions the rule of thumb that you have to see a profit three out of five years, but I don't see how a retrospective guideline actually helps anyone while they're filing.
 
2013-07-29 01:00:51 PM

AngryDragon: the8re: Hearing Accountant Dad's voice in my head: "If, for too many consecutive years, you write off more than you earn on your self-employment, then it's not a job, it's a hobby."

This.  It's common knowledge for anyone who owns a very small business.  The government doesn't want you writing off expenses for your hobbies under the guise of a failing business.


That's true but it misses an essential point: the government can't hit a failing business with taxes under the guise of it being a hobby. Losses are only one measure of whether or not the activity is a "business" or a "hobby" and based upon the facts in the article (which I am sure are not complete) the auditor in MN has a very thin reed to stand upon.
 
2013-07-29 01:05:08 PM
"They don't want this in front of a judge," she said. "It's kind of like bribery or black mail and I don't like it but they use it."

 No, they don't want it in front of a judge because court cases cost tax payers money, and it's a net win for them if they can avoid going to court, even if they get less money. It's the same reason prosecutors plead out every case they can, even the ones they know they can win.
 
2013-07-29 01:09:02 PM

filter: I have been there. Royalties were taxed around 30% for what is effectively the sale of 'property.' I considered it an expensive hobby so I didn't have to pay pro insurance rates.

As for profits--- good businesses have no profit. They reinvest for growth invent billable work.


Fixed
 
2013-07-29 01:16:29 PM

worlddan: thurstonxhowell:

She considers herself a professional and vigorously disputes the notion that she is not a professional. Is that still confusing to you?

Some people are just dense.

What the person was trying to say (not me) was viz:

A. She's confused because she's a guy who thinks she's a girl.
B. She's confused because she's an amateur who thinks she's a professional.

So she's doubly confused.


I think she knows exactly what she is.  We're the ones who are confused.
 
2013-07-29 01:21:01 PM
MN needs money for the new Viqueens stadium.  And since electronic pull tabs failed (shocker, i know) they are going after the small business owners
 
2013-07-29 01:30:51 PM

worlddan: That's true but it misses an essential point: the government can't hit a failing business with taxes under the guise of it being a hobby. Losses are only one measure of whether or not the activity is a "business" or a "hobby" and based upon the facts in the article (which I am sure are not complete) the auditor in MN has a very thin reed to stand upon.



She has to have some additional source of income from which to draw the money to fund her losing enterprise.

I bet that she tried to claim all of her deductions against her performance income, and reconciled that against whatever this other source of income is.

If I make $50,000 and pay $20,000 out of pocket to earn my paltry $10,000 on my side business.... I don't get have an AGI of $40,000.  I have a tax liability on the $50,000 I earned and my business didn't exist...unless I want to start defining it as a hobby.
 
2013-07-29 01:32:14 PM
 No no no, you can't have commoners using our tax code to their advantage. It's only if you're a wealthy company that you have access to the benefits in the tax code. How else can we keep the rich getting richer while the poor get poorer (which is happening). You gotta compensate for the "rising tide raising all boats" affect. Oh wait, that second thing was bullshiat but we're going to keep screwing poor people because it makes us feel better about ourselves.
 
2013-07-29 01:42:21 PM

Pangea: I have a tax liability on the $50,000 I earned and my business didn't exist...unless I want to start defining it as a hobby.


I would clearly never do such a thing, especially because the Internet is permanent.

I would also never do the taxes in pencil and just stop counting my expenses once I got to a few hundred dollars in profit on the schedule C, so as to avoid the aforementioned situation.
 
2013-07-29 01:42:59 PM

Thunderpipes: Good. Think about the drain on society this person is. Everyone needs to contribute.


Is she receiving public assistance?  If not , then fark you.  So long as she is supporting herself, or has a spouse willing to support her, it's none of your business.
 
2013-07-29 01:43:08 PM

Skirl Hutsenreiter: This is kinda interesting.  Since no one knows ahead of time that they're going to consistently make a profit, the IRS only requires a good faith effort at profitability, although being able to argue you have a reasonable expectation of profit in the future helps.  Under the IRS rules, then, someone who lived off their work for years and sustained that effort, even if they went through a multi-year slump in profitability, wouldn't have their status as a professional questioned.

Clearly Minnesota has different guidelines.  The article mentions the rule of thumb that you have to see a profit three out of five years, but I don't see how a retrospective guideline actually helps anyone while they're filing.


It may also come down to primary income source. They're still able to eat, so if they have a job doing something else, the art side should just be "happy surprise" income on top of that. I'm guessing more than anything they're looking out for person with a pays-the-bills job whose side "business" is not making money, rather than someone whose business fed them for a while, then they've been living off the accumulated capital/their own savings from the business for a few lean years.

But yeah, multiple years of losses for any small business is an instant red flag.
 
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