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  1. #1
    More Cheesier Than Ever Cheesehead's Avatar
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    I started a movie review site - Can I write off movies?
    I started a movie review site. Can I write off my movie ticket price if I go to see the movie? Seems like it would trigger a red flag as it seems to fall in the Weird Tax Write-off category (see http://articles.moneycentral.msn.com...fs.aspx?page=1 )

    I know that this belongs in the "business section" but I wanted to get a large number of people to comment on this. Move if you feel the need.
    This World is Not My Home
    We're gonna go inside, we're gonna go outside, inside and outside. . . And then we're gonna go go go and we're not gonna stop til we get across that goalline! Quotes from the movie Rudy, 1993

  2. #2
    Affiliate Manager PaulS's Avatar
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    Although I'm not a tax expert, since the expense does appear to be directly connected to your business, I would have to believe it would be deductable.

    I would only caution to keep the expenses reasonable and relevant. For example, taking 6 people with you to watch the movie you're about to review may not be a legit write-off... and you'd likely want to be able to show that you actually did review at least a majority of the movies that you are claiming as an expense.

    JMHO

    Paul

  3. #3
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    Cheesehead

    Send me your SS# and I'll ask a friend at the IRS >> hehehe

  4. #4
    More Cheesier Than Ever Cheesehead's Avatar
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    Quote Originally Posted by PaulS
    Although I'm not a tax expert, since the expense does appear to be directly connected to your business, I would have to believe it would be deductable.

    I would only caution to keep the expenses reasonable and relevant. For example, taking 6 people with you to watch the movie you're about to review may not be a legit write-off... and you'd likely want to be able to show that you actually did review at least a majority of the movies that you are claiming as an expense.

    JMHO

    Paul
    I would only claim this expense for movies I actually post reviews on. And I would not include my wife or any refreshments. Just the movie stub. Seems legit. I will run it by my accountant, although this whole internet mktg concept is a bit foreign to him - that is why I asked here. I realize that sometimes even legit expenses are not worth the risk of triggering an audit.
    This World is Not My Home
    We're gonna go inside, we're gonna go outside, inside and outside. . . And then we're gonna go go go and we're not gonna stop til we get across that goalline! Quotes from the movie Rudy, 1993

  5. #5
    Beachy Bill's Avatar
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    Quote Originally Posted by Cheesehead
    I would only claim this expense for movies I actually post reviews on. And I would not include my wife or any refreshments. Just the movie stub. Seems legit. I will run it by my accountant, although this whole internet mktg concept is a bit foreign to him - that is why I asked here. I realize that sometimes even legit expenses are not worth the risk of triggering an audit.
    Sounds logical to me. I'd bet that your accountant gives the go-ahead. If your wife contributes to your review by offering details, opinions, etc. then her ticket should also be deductible. I'm sure you listen to her impressions of the film in forming your own review and writing the narrative. On another note, if your accountant is not that familiar with what your source of income is and how it is derived it may be time to find a new accountant.

    This year I have retained a tax attorney and a new CPA because I am restructuring my business. They are expensive, at least some people would say so, but they are also very, very cost effective for what they are doing for me and the business. They both have a good grasp on what it is that I (we) do for a living.
    Bill / Marketing Blog @ 12PM - Current project: Resurrecting my "baby" at South Baltimore..
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  6. #6
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    This would probably fall under rules that are similar to those for "mystery shoppers". The IRS does allow some deductions but they usually limit them to the extent of income. In your case, this would be income generated specifically by the blog. You would have to be able to CLEARLY identify the income was generated by the blog. You will also need to make sure you keep your income from the blog separate from any other sources of income. You also need to think about the expense of traveling to the theater as a deduction.

    The spouses ticket would probably NOT be deductible. There are several court cases where meals shared by spouses were not deductible even though they discussed business and were in the same business together. When there is a close personal relationship, it will sometimes negate the business purpose. If you take your spouse to dinner you also need to take a non-related business person to dinner for it to be deductible. Even though the ticket is not the same as a dinner, the same principle would apply.

    I believe you have also given yourself the best advice - run it by your accountant. If your CPA does not give you the answer you want, DO NOT fire them. Their job is to give you the right answer which is not always what you want. Internet marketing income/expense is a relatively new area for the IRS and not all of the rules have been established. You will probably have to do a lot of research and try to find things that are similar in nature.

    Hope this helps.

    BTW, I am a CPA and have a master's degree in Tax from the University of TX in Arlington. I was also a partner in a tax practice for 14 years.

  7. #7
    ABW Ambassador Paul_Ward's Avatar
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    I'm in the UK and not the USA - however....

    I've always afound it useful phoning the taxman and asking for advice - so I'd do this if I were you. Here in the UK they are very helpful to people who make the effort to do the right thing, I'm guessing it is the same across the pond. I guess the real crooks don't bother to ask, so they are pleased when people ask up front rather than make excuses afterwards - nothing to lose.

  8. #8
    This may be a bit obvious, however, as long as you are claiming the income for the business you should be able to write off any directly related expenses.

  9. #9
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    I would think that writing off the ticket to a movie would qualify, since it is a necessary to view the movie to write a review about it. You could probably write off $10 per movie for the ticket and travel expenses to the theater.

    On the other hand, if your Movie Review Website was set up as a separate LLC business with it's own bank account it could pay people for reviews ... whatever it paid would be a business expense you could write off. No law says you cannot be a paid reviewer.

    You could use ADSENSE to generate revenue or charge for ad space or post some movie related affiliate links.

    I would think that if you wrote a review per week and archived them, after you have 10 or so reviews up on the site, you would start to see SEO traffic and since the content changes weekly, Google may give you some listing love. If you can get a listing on the first page to the keyword - movie reviews - you would do pretty well.

    If you paid $20 for a review ... it would cost you $100 a month plus hosting and maybe some advertising to get initial viewers ... whether you would cover the approximate $150 per month costs would be problematical ... but if you can find a way to get PAID Banner ADS to NEW movie releases from Studios or Indie producers, you could make more than chump change if you had enough traffic to warrant the cost to the movie moguls.

  10. #10
    Outsourced Program Manager TrishaLyn's Avatar
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    Quote Originally Posted by SlowCooker
    The spouses ticket would probably NOT be deductible. There are several court cases where meals shared by spouses were not deductible even though they discussed business and were in the same business together. When there is a close personal relationship, it will sometimes negate the business purpose. If you take your spouse to dinner you also need to take a non-related business person to dinner for it to be deductible. Even though the ticket is not the same as a dinner, the same principle would apply.
    That's a good thing for me to know... I know that since I work from home, I've calculated what percentage of the house my office space takes up and I can deduct that percentage out of my rent, utilities, etc. This will help since my husband is attending Affiliate Summit with me!

    Also, to Cheesehead, after talking to my tax pro about deductions and stuff recently, I believe you shouldn't have a problem with at least deducting the ticket costs and travel expenses to the theater. Just be sure to keep ALL your receipts in a separate file so it's handy for your tax preparer at the end of the year.
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  11. #11
    ABW Veteran Mr. Sal's Avatar
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    Quote Originally Posted by Cheesehead
    I started a movie review site. Can I write off my movie ticket price if I go to see the movie? Seems like it would trigger a red flag as it seems to fall in the Weird Tax Write-off category (see .....
    Pardon my stupid question, but...

    If I start a sex web site. Can I write off my blue pills expenses?

    Can I write off my and therapy sessions, too?

    Are orgies are out of the question as a business, group expense?






  12. #12
    Moderator MichaelColey's Avatar
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    One of the sites I have planned will be focused around restaurants. I've often wondered the same thing in regards to that site. My accountant seems to think they would be valid expenses, but he didn't seem all that positive.
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  13. #13
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    There are very few court cases that are on point so there will always be some degree of uncertainty regarding the deduction of expenses of this nature. A good CPA will always take the most conservative option. Aggressive positions may save tax money in the short term but the risk of audit goes up and if you end up defending an issue it can get really expensive.

    I think the key issue is whether the activity generates income. Most of the time the IRS will allow expenses necessary to generate income. If the activity generates a loss, then you get into loss limitation issues.

  14. #14
    More Cheesier Than Ever Cheesehead's Avatar
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    Quote Originally Posted by SlowCooker
    There are very few court cases that are on point so there will always be some degree of uncertainty regarding the deduction of expenses of this nature. A good CPA will always take the most conservative option. Aggressive positions may save tax money in the short term but the risk of audit goes up and if you end up defending an issue it can get really expensive.

    I think the key issue is whether the activity generates income. Most of the time the IRS will allow expenses necessary to generate income. If the activity generates a loss, then you get into loss limitation issues.
    Good advice on both counts. I don't think I would even consider this until I could show a profit/income specific to this site (like via tracking channels). And then I would talk to a CPA and discuss possible audit red flags.
    This World is Not My Home
    We're gonna go inside, we're gonna go outside, inside and outside. . . And then we're gonna go go go and we're not gonna stop til we get across that goalline! Quotes from the movie Rudy, 1993

  15. #15
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    I think the only time you really have an issue is when the site is not making enough money to cover the expenses. Then, you might have to apply what is called "hobby loss" rules. This essentially means you can write off the expenses to the extent of income.

    It also depends on your situation and how aggressive you want to be.

    If you can show that substantially all of your income is derived from websites and affiliate marketing on those sites, you may be able to avoid the hobby loss rules. If you have another source of income, then the hobby loss rules may apply.

    As for red flags, any activity/business that generates a loss every year for several years in a row can be a red flag.

    Another BIG red flag is home office expense. If you are taking this deduction, make sure the space is dedicated to the home office. Don't set up your office in a space that also has bedroom furniture or living room furniture. Office means office.

  16. #16
    More Cheesier Than Ever Cheesehead's Avatar
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    Quote Originally Posted by SlowCooker
    Another BIG red flag is home office expense. If you are taking this deduction, make sure the space is dedicated to the home office. Don't set up your office in a space that also has bedroom furniture or living room furniture. Office means office.
    My accountant covered that with me. I write off a 6'x11' "office" space and a proportionate amount of utilities. No problems.

    I have referred to my office in the past as "Michael Jackson's jail cell" as it has almost exactly the same dimensions as the cell he would have occupied if convicted. I can leave my "cell" whenever I want however!
    This World is Not My Home
    We're gonna go inside, we're gonna go outside, inside and outside. . . And then we're gonna go go go and we're not gonna stop til we get across that goalline! Quotes from the movie Rudy, 1993

  17. #17
    Outsourced Program Manager TrishaLyn's Avatar
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    That makes me a bit nervous. We don't have a room that's JUST my office... the only place in the house for my desk and shelves is what's supposed to be the dining room, which isn't its own room and is connected to the living room.

    My tax pro said it shouldn't be a problem though. Although I wish I did have separate office just to make it easy.
    Trisha Lyn Fawver

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  18. #18
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    To qualify for the home office deduction, it usually requires "exclusive use". Check out this IRS publication.

    http://www.irs.gov/publications/p587/index.html

  19. #19
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    I believe it would qualify....but....but ask 2 or 3 qualified cpa's to make sure-
    sleeping at night is good.

  20. #20
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    Quote Originally Posted by Cheesehead
    I would only claim this expense for movies I actually post reviews on. And I would not include my wife or any refreshments. Just the movie stub. Seems legit. I will run it by my accountant, although this whole internet mktg concept is a bit foreign to him - that is why I asked here. I realize that sometimes even legit expenses are not worth the risk of triggering an audit.
    Its new to many accountants, most think regular products or service.
    best of luck to you with the movie area,its a tough one as there are many movie review sites out there

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