Today TaxMama hears from Alice in Montana who asks. “I am a writer, operating as a sole proprietor of a freelance writing and research business. I am nationally published, and have a 20 year tax history doing this.
I am writing a children’s book about the dog I adopted and how he was transformed from an overweight, out of shape backyard fixture, to an agility champion. I got the idea for the book the first week I had the dog, because his case is so unusual.
My question is, can’t I legitimately deduct the expenses of adopting, training, and maintaining this dog? I am legally allowed to deduct all kinds of other expenses related to my writing, so why not this one, too? I really have been writing the book, this is not a ruse. I’ve been working on it, off and on, for almost a year, and the idea about the tax deduction only came to me today.”
Well, Alice, This is a gray area.
The main question is – If you were audited, would it hold up? Here are some things to think about.
1) You didn’t get the dog in order to write the book.
2) If you were writing about your children, would you be able to deduct the costs of raising them?
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I doubt it.
If you were breeding or raising dogs…probably, yes, you’d get to deduct the costs of caring for them – but you’d have to capitalize the costs of the dogs – in other words, to treat them like assets or breeding stock and depreciate them.
Do you spend 100% of your time with your dog, strictly for the purpose of coming up with stories for the book? Probably not. You’re working on the book, off and on.
You could try to deduct the costs of caring for your dog for the time it takes to complete the book. (and pro-rate those costs based on personal time.)
Or you could use hobby treatment and deduct the costs of caring for your dog until it used up the income from the book – but don’t go towards creating a loss.
If you document how those costs were directly related to the book, your deductions might just stand up.
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It will depend a great deal on who actually is the auditor looking at your case when you are audited.
I’ve managed to win some cases like this – but a great deal depends on the documentation you create along the way.
And remember, you’ll find answers to lots of business, hobby loss and other tax information, free. Where? At TaxMama.com
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