Posted by Rob Perelli-Minetti on January 31, 2001 at 17:26:08:
In Reply to: Tax Questions on new horns posted by Jay on January 30, 2001 at 22:55:08:
If you are a professional musician and have a 'business' as a pro -- playing and/or teaching, you should be able to report this business on a Schedule C to your federal tax return Form 1040.
Subject to the rules governing business deductions, you can deduct your expenses and depreciate capital costs such as the cost of an instrument. Depreciation for muscial instruments is about 12 years, with a range from 9.5-14, and maybe a 5% allowance per year for repairs. There are both straight line and accelerated methods, which each have advantages.
If your instrument is eligible for a Section 179 deduction, you could deduct the cost (maximum $20,000 for 2000 - one hell of a tuba -- up to the amount of your income from the trade or business shown on Schedule C) rather than depreciate it, but it would be subject to recapture if you sold the horn before the end of the depreciation period.
BTW, losses from your music business (that is in excess of income from that business) could be offset against your other income. However, to avoid having this disallowed as a "hobby" loss, but you need to make a profit in three out of five years and, until you've got five years in business, there's a form to suspend the period.
This is not legal and/or tax advice. This stuff is complicated and you should (1) get a good tax program and (2) talk to an accountant and/or tax attorney who works with artists and musicians.