In reality, I believe you can lose money every year, but if you do then you should probably find another way of making a living. Many of the major airlines lose millions every month, and they have done so for decades, but for some strange reason they're still in business.

There is a book availbale called Tax Loopholes--all the law allows. I purchased it several years ago and it really opened my eyes to a lot of tax issues. The bottom line, however, is quite simple. Keep impecible records, document all expenses, regardless of how small, and don't forget to pay your self.

Here's a classic example. Lets assume that you go on a job to play a private party at a large hotel's banquet room. Here's some of the possible expenses you'll incur: Parking, tolls, gas, meals, tux cleaning, hair coloring (cover that gray) are just a few. Document everything with reciepts, place them in folders under the associated categories and if possible, use a check or credit card for everything.

If you're using a credit card, enter the information in a checking program such as Quicken, and itemize every item using the SPLITS feature.

If you pay cash for something, be sure to get reciepts. Then write the expense information on your calendar for that day(Tolls $5, etc). If you have to use a pay toilet and it cost just .25 cents, write it on the calendar.

Then, when compiling the information on your Schedule "C" using Turbo Tax, you can itemize each of these categories, plus set up additional categories. When it appears that you have finally made some money in the music business, go back to the schedule C and begin dumping money in your retirement fund until you bring your adjusted gross income down to a reasonable level. This will lower your taxes considerably, plus provide you with a place to squirrel away some pretax funds for when you get old like me.

As I said before, my ultimate goal is to pay $1-million in income tax one year--that's gonna' be one hell of a year!

Gary