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The Magic Cafe Forum Index » » Penny for your thoughts » » Moral Question? (2 Likes) Printer Friendly Version

MatthewSims
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Lets say that you have been proposed a tax deduction on an expensive product of mentalism, or several products. Things like SS 2.5, Mindb*st*r, Promystic, etc.

You have the opportunity to completely write these off. The only catch is...you have to perform and explain to the tax assessor how they work.

I'm curious as to everyone's genuine thoughts on this. Would you do it? Why or why not?


Matthew

PS. This is completely hypothetical. I have not been proposed this, nor do I even own these products.
Al Desmond
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I'm totally confused by your question. Props can be deducted as expenses on your tax return, as long as you can prove that you make an income (or loss) as a magician (full or part time).

What is this "tax assessor" your speaking of?

Even if you were called in to an audit on your tax return, all you have to prove is that you have attempted to make an income as a magician.

The term "tax assessor" is throwing me. A tax assessor is usually someone who assesses the value of property in order to tax that property (whether it be something like your home, land, value of items used in a business). But a tax assessor has nothing to do with your tax return.

Do you mean tax auditor? And even then why would you have to perform an effect and then tip it for a tax audit? All you have to do is prove proof of purchase and prove that the item was used for business, not personal pleasure or as a hobby.
MatthewSims
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Al,

Yes, I suppose "tax auditor" would be the correct term. I'm not very keen on taxing terms Smile

I'm aware that you can deduct these things from your taxes, and not having to actually perform the effect and explain its methodology.

The original question was entirely hypothetical, and just proposed the idea that if you DID have to perform it and explain its workings (and how it earns you income), would you do it in order to get the return?

Perhaps I did not explain the question clearly, and perhaps it's just a silly idea all together. I was just genuinely curious how people would respond to such a situation of having to explain their methods in order to get money back for it. I suppose that's really the root of my question...

Would you take the money, or is the experience of the mystery too beautiful?

Sorry for the confusion.

Matthew
TonyB2009
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Mathew, I was arrested once during a blindfold drive through Limerick (the festival organizers had forgotten to clear the stunt with the Gardai). Beyond telling the arresting officer that I was a magician, I would not explain how I did the effect. But after I was processed I knocked on the Superintendent's door, and told him that if they proceeded with the dangerous driving charge, I would appear in court blindfolded and make his officers look like gobs*hites. The charges were dropped.

I guess in your theoretical situation I would explain that they were props, and would leave it at that. I would then refuse to pay the taxes he demanded, and insist on my day in court.
funsway
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While playing with terminology this is an "ethical" question rather than a "moral" one.

but the general idea has some validity. Back in the later days of the Inquisition performing magicians had to demonstrate that their effects were based on either "skill" or an "act of God" -- and not based on "in league with the devil." It was an impossible test as the performer had to put themselves at risk regardless. Laurence O has developed a CB routine based on this theme that I am attempting to script.

The effectiveness will assume that each spectator has been confronted by a choice between a "rock and a hard place" and will enjoy a long skit in which the hapless performer attempts to avoid harm when no knowing the rules of the game.

In your "game" the objective would be to provide an explanation that would satisfy the "judge" -- not necessarily the actual cause or method. You probably drove a car to this "test." Can you prove how an engine works or the GPS system? Both are pretty magical.
"the more one pretends at magic, the more awe and wonder will be found in real life." Arnold Furst



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robwar0100
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Matthew,

If you live in the United States, then I believe you file a Schedule C to your IRS form 1040. I think where the issue can be is if you do not perform and are without any kind of revenue. I think if you continue to constantly lose money (the expenses paid to acquire props) and show no revenue from your investments, the IRS will ultimately decide you are not really running a business.

I do magic on the side (for pay), and because it is not my main source of income, I do not take advantage of all of the tax breaks for businesses. However, anything I buy for magic, whether book, prop, ebook, lecture, convention, etc., all becomes part of the expenses of running my sole proprietorship. Because magic has to pay for magic, the revenue and expenses are always in line with each other.

I suspect if there is no revenue to demonstrate this is a business, then the IRS (or similar taxing authority) would deem you to be a hobbyist and how it would go after back taxes, I have no clue.

Bobby

p.s. In the U.S., if you purchase a $1,000 prop, it does not result in $1,000 coming off of your tax obligation. It gets factored into your adjusted gross income, and your taxes are based on that. I am not a tax professional, so the best thing to do is seek out a competent accountant.
"My definition of chance is my hands on the wheel," Greg Long.
MatthewSims
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Just for further clarification, I am not looking for a tax break. I do not perform often enough (at least paid shows) in order to even be considered for such tax breaks.

Again, my only concern was how someone would respond in such a situation.

A similar occurrence did actually happen one time years ago. I performed a card trick for a gentleman, to which he then sat in silence for about ten seconds. He then proceeded to pull out a one hundred dollar bill and offered it to me for the secret. I smiled devilishly and declined.

Maybe the whole taxes scenario is a bad example. My only concern or curiosity was to see who would accept the money vs allowing the mystery to ferment and become stronger. As they say, we all perform for different reasons. For some it is simply a financial means with entertainment, for others they are more emotionally attached to their art. I just wanted to know where people stand.

Funsway, you are correct. This is a question on ethics.

Matthew
Jerskin
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They're never going going to ask.
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Tom Cutts
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Probably same as someone would respond to clicking on your weblink in your profile only to be greeted with a warning that this leads to a possible fishing site and the next screen asks for google log in info? Probably the same as your question, except mine is not hypothetical.
Mark_Chandaue
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I would demonstrate the effect (not the method) and then bill the tax man for my performance Smile

Mark
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MatthewSims
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Haha. I think we have a winner with Mark Smile
robwar0100
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Matthew,

Your question went right over my head. Tax auditor doesn't need to know anything other than is it a valid expense.

Bobby
"My definition of chance is my hands on the wheel," Greg Long.
mixman
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Tax auditors are interested in receipts, not methods. Always make sure to keep your receipts.
Sean Giles
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He was asking a hypothetical question. Most missed that. Pretend Smile
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