Musician and royalties

[cientax]

Does anyone out there have a professional musician that makes big money in a recording contract

I have anew situation and have questions on what to do.

Please email me at [email protected]

[jainen]

>>musician that makes big money in a recording contract<<

Well, depending on the contract and other factors he is either an employee, a member of a partnership, or self-employed. I suppose in a rare case he could be running the income through a corporation. Don't use Schedule E -- royalties from his own creative works are business income.

There is a special exception for expenses if he is a performer working as an employee, and artists are exempt from uniform capitalization rules, but otherwise most of the usual stuff applies. Don't forget that he may need to file in multiple states if he goes on tour.

[cientax]

>>musician that makes big money in a recording contract<<

Well, depending on the contract and other factors he is either an employee, a member of a partnership, or self-employed. I suppose in a rare case he could be running the income through a corporation. Don't use Schedule E -- royalties from his own creative works are business income.

There is a special exception for expenses if he is a performer working as an employee, and artists are exempt from uniform capitalization rules, but otherwise most of the usual stuff applies. Don't forget that he may need to file in multiple states if he goes on tour.

You gave me some of the information I was looking for but can you direct me to a site on how to handle this if he receives a 1099 shown as royalties? The company he is contracted with told him that the money was going to be reported as royalties. He did state that he has been filing as self employed but has since incorporated but not until after he received the money. Another problem that may exist is that the contract is in his persoal name and not in the name of the corporation.

[jainen]

>>how to handle this if he receives a 1099 shown as royalties<<

His royalties received in connection with a trade or business are reported on Schedule C, just like his other earnings. If he dies, his heirs can use Schedule E to report later royalties derived from the copyrights.

[cientax]

>>how to handle this if he receives a 1099 shown as royalties<<

His royalties received in connection with a trade or business are reported on Schedule C, just like his other earnings. If he dies, his heirs can use Schedule E to report later royalties derived from the copyrights.

That's what I wanted to hear in a sense but now it (net income) will be subject to SE tax which is not what he wanted, BUT that's life I guess.

Thank you for your help.