Regarding Ckojali's posts:

From what I have read, it looks to me like you do have a profit motive, although you have decided to donate the money you raise to charity. So although this is a sideline and done for your recreation, it is treated as a business and therefore expenses will be deductible. This is a simple Schedule C return and I think any software package should be able to handle it, there would be no need to purchase a premium package that would handle more complex returns than you have.

You would fill out schedule C with your proceeds and expenses and show your net profits. You will need to pay income taxes and self-employment taxes on the net profits which of course the software will take care of. Your charitable donations would NOT come off the Schedule C but would be on your Schedule A. It sounds to me that you are donating your gross proceeds to charity, although you have expenses...your net profits will have income tax and SE tax but your larger charitable donation of gross proceeds will reduce income taxes and maybe you will even come out a little to the good.

That's the way I see it, check with your local tax professional to go over the details with you.

Thank you!! That is exacly what I wanted to know. The short version of A+B+C has to be > than 5k.

Thank you so much, I definately should be itemizing!

Doonie said:i have an LLC that lost money last year (its first year) and is going to make money this year. it is a 50/50 partnership for tax purposes as we are both 50% holders (members) in the LLC.

we do not pay ourselves anything from the income of the LLC as it goes back in for further r&d (software company with hardware components). however, we both do demos on site and trade shows. is it possible to claim the mileage deduction on our personal return pertaining to the business even though we dont actually take an of that business income into our own hands? the income im talking about isnt substantial, it should be about 15K this year.

additionally, if we can take the mileage deduction (i keep track of how far the demo is from my house as we dont have an office), is there any other type of deduction we can take?

thanks

I could be misreading your post, but it sounds like you think that because you are not "paying" yourself from the income of the LLC that that income is not currently taxable. Since, as you say, you've elected to be taxed as a partnership for Federal purposes, then the income generated by the LLC in any given year is taxable to you in that year regardless of when "cash" is actually distributed to you.

As far as the mileage deduction you refer to...if the LLC reimburses you, then it would be deductible against the LLC income which is passed through to you and your partner, in this case, equally. If you prefer that the LLC didn't reimburse you, then you should be able to take it against your income (partnership or other). At the end of the day, however, the tax impact should be the same (disregarding differences if there are unequal deductions that you and your partner may incur from travel)...it would be more of a cash flow issue for the LLC.

umcsom said:I need help. I remember earlier this year people talking about a tax credit for people who make under a certain amount and that put money in an IRA. It is something the gov is doing to promote savings in middle/lowmiddle class. What is the name of that?

It is popularly called the Savers' Tax Credit. The IRS calls it Credit for Qualified Retirement Savings Contributions.

See Form 8880.

BradMajors said:How much can I deduct from my taxable income for donating my "free" Dell 720 printer, which
came bundled with my Dell 700m laptop, to charity?

Deducing zero because that is what Dell says it cost me doesn't sound right.

The Dell invoices list them as $9, so I assume that would be the write-off amount.

We give 10% of our annual salary to charitable organizations. Due to converting a traditional IRA to a ROTH and some short term capital gains, we are going to be going from the top of the 15% bracket to the top of the 25% bracket. Since this is a "big" income year, we have decided to maximize our itemized deductions, primarily through increased charitable giving (and not giving for say the next four years). Since we were going to donate the money eventually anyway, it's like you are getting a 25% return on your dollar. We expect that we will not have greater than the standard deduction for many years. We've given enough and have enough other deductions to reduce our taxable income to the 15% level (58k). My question is do you think it wise to give a little more? I mean, 15% return isn't bad either. Assuming the difference in tax savings are reinvested in the market, where is the flaw in my thinking?

Side Note: Due to Katrina, you can give greater than 50% of your gross adjusted income this year (with caveats) to charitable causes.

hmmm,. this might have been asked before on this forum but I have searched but can't find it.

Say if I have a small business on eBay, buying things like from FW for Free after rebate and then resale it. Would I count those item as $0 toward inventory or.. the actual price without counting the rebates?

ZackVLion said:Hello
Quick question....
Just sold a house, but was owned 50/50 with someone else...What do I put on my tax return? Do I just divide all the numbers by half (ie put price sold as 100k instead of 200k and same with price bought)...Thats what I would think, but dont house sales get reported to the irs? worried they would get reported that the house sold for 200k and see i only put 100k and have a problem....anyone know what the correct procedure is here? thanks.

The proceeds from the sale will be reported to the IRS on Form 1099-S by the closing agent (attorney, etc.). The agent should issue two forms, one for each of you, showing your respective shares of the sales proceeds. Talk to your attorney and/or the person responsible for issuing the 1099-S about this beforehand so no mistakes are made.

If, for some reason, the agent issues only one Form 1099-S and happens to issue it to you, you will have to issue your partner a Form 1099-S for their share of the proceeds. List the partner's share as a nominee distribution on your tax return. (I doubt you'll need to do this however.)

How you split the proceeds and how you split the initial cost and expenses depends on the business arrangement between the two of you and how much each of you actually paid into the house.

RM Hilton: I see no tax reason for giving more this year. I would consider bunching your donations every few years so that you can itemize in the donation years. Try to give appreciated stock instead of cash if you get long-term gains.

You probably already thought of this..

dhobi said:I have 400 shares of a Company that have a total value of $0.002. How do I dispose of them and get a tax write-off without having to pay transaction costs. When does IRS consider assests worthless and eligible for write-off?See page 40:

IRS Publication 550 - Investment Income and Expenses