Writing Contest #2 - "JEM GIVEAWAY" discussion - Page 2

**jemsite** · #16 02-25-2006, 07:47 PM

that would be deductible after i register jemsite as a small business, get a business license, pay nj business taxes and other nonsense. Oneday i will get around to making jemsite into a LLC but until that day i'm reporting this as "MISC INCOME" as i have no valid "deduction" (kenny did as he is a "musician" by trade) from what i have been advised... glen

ps - if there are any certified tax accountants reading and they want to expedite this process (for raffle #3 or #4) please PM

Rich · #17 02-25-2006, 07:50 PM

It would be deductible even if reported as Misc. income. Only *profit* matters. When you have receipts to prove the profit was offset with expenses it makes no difference if it's a registered business or not. Even in personal income taxes, profit - expense = net profit. Again, talk to your accountant

carlos grijalva · #18 02-25-2006, 07:56 PM

And how will the winner be chosen?

Tom Gilroy · #19 02-25-2006, 08:46 PM

So is this writing as in music composition or an "I deserve a Jem because..." essay?

Chris777 · #20 02-25-2006, 09:35 PM

I'm confused too.

ibanezcollector · #21 02-25-2006, 09:44 PM

just relax guys go reread the first thread on the essay questions.. from the first contest.

Im in again im still glad my stupid idea from boredom has become a full blown thing.. I hope that I win one day LOL

carlos grijalva · #22 02-25-2006, 10:57 PM

Quote:

Originally Posted by Tom Gilroy

So is this compisition or wirting as in composition, or a "I deserve a Jem because..." essay?

I guess its composition, but we'll have to wait for someone to answer...

**jemsite** · #23 02-26-2006, 01:03 AM

It is a "COMPETITION" as that is the only LEGAL method to provide such a giveaway. You each have EXACTLY the same 1 in 125 chance of winning and can post your "writing submission" in any post in the private forum area

...glen

**jemsite** · #24 02-26-2006, 01:11 AM

Quote:

Originally Posted by Rich

It would be deductible even if reported as Misc. income. Only *profit* matters. When you have receipts to prove the profit was offset with expenses it makes no difference if it's a registered business or not. Even in personal income taxes, profit - expense = net profit. Again, talk to your accountant

lets take this to email.

suffice to say if i COLLECT $2500 in cash/paypal that is INCOME unless it is a deductible expense. You can't take that, buy a guitar and "give it away" and nullify that INCOME. That is a separate "DONATION" and is not dollar for dollar by any stretch. ROTF. Talk about a HUGE GAPING loophole (noone would pay taxes on anything except $$$ paid toward utilities/mortgage). LOL... glen

leppermessiah · #25 02-26-2006, 02:03 AM

I'll be in again.

I can have a UV right?

**jemsite** · #26 02-26-2006, 02:05 AM

you can substitute a UV777BK (probably have to wait for them to arrive) or a VWH (if the BMRM is the prize) as per the previous competition... glen

giannifive · #27 02-26-2006, 10:27 AM

Quote:

Originally Posted by Rich

It would be deductible even if reported as Misc. income. Only *profit* matters. When you have receipts to prove the profit was offset with expenses it makes no difference if it's a registered business or not. Even in personal income taxes, profit - expense = net profit. Again, talk to your accountant

I believe Rich is right. Look at your schedule C. You treat the whole thing as self-employment, but because you make no net profit you pay no income or self-employment tax on it.

jay ratkowski · #28 02-26-2006, 12:02 PM

You'll have to report everything on your schedule C, and since all your income is taken away by expenses, you should pay no tax. You'll just have to report all the expenses and what they are. (most should be under "misc expense" for however you report the prize values).

The initial profit means nothing, it's all about the bottom line. If your business makes $30k from sales, but spends $35k on expenses, you lose money in the end. You can't pay tax on a loss.

EDIT - this is all assuming you have a way to list (NOT deduct) the cost of the guitars as an expense. Your state laws are going to be the big kicker on whether it can work. You could probably get creative and say the guitars were purchased for reviewing purposes which is the main objective of your business (jemsite.com).

At any rate, if your accountant can't come up with a legal way of listing the guitars as an expense... won't there be some money left over after prizes to put toward the website upkeep? That can deduct from the earning total so the hit isn't as bad.

I'd probably recomend talking to your accountant now and letting them know what is going on... you may have to change the payout total to account for any taxes you'll get hit with.

**jemsite** · #29 02-26-2006, 12:15 PM

Quote:

Originally Posted by jay ratkowski

EDIT - this is all assuming you have a way to list (NOT deduct) the cost of the guitars as an expense. Your state laws are going to be the big kicker on whether it can work. You could probably get creative and say the guitars were purchased for reviewing purposes which is the main objective of your business (jemsite.com)..

thanks... any tax discussion lets PLEASE take to email/pm... I'D GREATLY APPRECIATE IT.

I have already inquired (gotten advice) and made more inquiries friday awaiting a reply.

this is almost irrelevant to the "competition"... even if it's worst-case-scenerio we're tallking $3-4 extra per entry for a potential $2500 prize... very, very insignificant thankfully

....glen

**jemsite** · #30 02-26-2006, 01:29 PM

the competition page has been updated as we prepare to move forward. hopefully this will explain how things work a little better.
http://www.jemsite.com/compete.htm

... glen