Gary,

I have a minor in accounting. My instructors always said that you can deduct anything. It's getting caught that is the problem.

Seriously, the answer is no. You can't deduct income that you never made, but hey, you are getting up there in age and a life sentence really might not be that long so , why don't you give it a try and let us know?

Tom

[This message has been edited by Tom Cavanaugh (edited 12-18-2009).]

One more scenerio. You are self-employed. You have a contract to play a restaurant gig which requires you to buy a piece of gear...say an extra long, heavy duty extension cord. You buy it. The restaurant calls and cancels the gig.

1. Can you claim the lost wages from not performing. Nope.

2. Can you claim the expense of the extension cord. Sure.

Years...light years ago...I played a gig and got stiffed. I did the work. I didn't get paid. My tax guy said I could not claim a monetary loss as a deduction because I didn't lose any cash already in my possession.

I could sue in small claims...but only the legal costs would be deductible as a business expense...not the lost wages. And, if I would have been lucky enough to get the judgment and cash from the client, then the income would be taxable less the legal costs.

Make sense?

Eddie

If those 2 jobs were not cancelled, you would have collected the fees and reported the income on your tax return.
Since the jobs were cancelled, you did not receive the income and your reported income will be lower. You do not get to write off the loss because you never reported the income from the cancelled jobs.

Mouse killer, er Gary...

Had very similar situation a few years ago. My accountant said I neither incurred the expense OR income of performing. So, the short answer is no.

If you had drove to the venue to find it was closed or canceled, you could've wrote off the mileage.

As far as having a cancellation clause, yes...that's routine but usually "Acts of God" are an exception that relieves the client from any burden of payment. In fact, I've never heard of a cancellation clause that didn't allow for relief that way.

In my opinion, it would be bad business to try and hold an account responsible for any part of the contract price if an AOG caused the gig to not occur.



------------------
Bill in Dayton

You guys are right--not a write-off. I found the information last night in my Turbo Tax help disk, a program called "It's Deductible."

Oh well, I would not have ventured out for the next two days anyhow--we're in the middle of a blizzard. I hate winter!

Thanks,

Gary

Gary ... what's up ... I've often heard you refer to where you live as "the sunny south" ?!?!? ...
t.
PS ... we are getting prepared for that same storm ... problem is, EVERY snowfall up here is treated like the second coming of the blizzard of '78 ... no doubt the super markets are already out of bread and milk...
t.

Gary, the easy way to figure deductions is, you can't deduct anything that isn't an out-of-pocket expense or isn't set up on a depreciation schedule. Deductions are deductions from income based on costs/expenses-outlays figured as a cost of doing business. Lost income is not deductible at any time, but rather impacts your gross or top line.

The good thing about accounting training is, you are expected to understand the process, not just learn the rules by rote.

It's snowing in Lexington today, and people are canceling parties right and left.


Be well and stay warm, everybody!


Russ

It is supposed to drop into the low 50's by gig time tonight in S. Florida....but so far... no cancellations.

Eddie

Eddie,

It's still snowing, it's 9 p.m., but it should stop by midnight. The weather guy says we could get up to 30 inches in my area, 24 inches in Baltimore, and 20 in DC. Sure wish I was in Stuart, FL right now.

Tony,
Compared to your part of the world, this is the sunny south. In New England they only have two seasons, winter and July 4th.

Cheers,

Gary

Man....the gig was over at 10:30 and the temp had to be down to 57. I had to roll the windows up on the ride home.

Can't wait to get some hot chocolate.

Eddie