40.9 How Authors and Artists May Write Off Expenses

Self-employed authors, artists, photographers, and other qualifying creative professionals may write off business expenses as they are paid. The law (Code Section 263A) that requires expenses to be amortized over the period income is received does not apply to freelancers who personally create literary manuscripts, musical or dance scores, paintings, pictures, sculptures, drawings, cartoons, graphic designs, original print editions, photographs, or photographic negatives or transparencies. Furthermore, expenses of a personal service corporation do not have to be amortized if they directly relate to expenses of a qualifying author, artist, or photographer who owns (or whose relatives own) substantially all of the corporation’s stock.

Current deductions are not allowed for expenses relating to motion picture films, videotapes, printing, photographic plates, or similar items.

An author or artist with expenses exceeding income may be barred by the IRS from claiming a loss under a profit motive test; in that case, the profit-presumption rule (40.10) may allow a deduction of the loss.

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