Problem:
Your client, Deborah Harris, writes you and asks you to assist her in understanding her filing obligations surrounding the video business that she started during the last tax year, for which she thinks she has a filing obligation. She wants to make travel videos to publish on her blog and YouTube channel. It's early and she doesn't have much income yet, but she believes that she has substantial potential to earn advertising revenues. Additionally, she plans to earn revenue by building her library of content and then licensing it to various studios and production companies. Below are her income and expenses that she hopes to include on her tax return: Non-photography income from her full-time banking job for which she gets a W-2 form for $75,000. Video equipment she purchased for $15,000. Equipment insurance premium of $500. Computer equipment for $3,800. Computer software for $675. Various magazine subscriptions she purchased for $1,000. Travel supplies (suitcases and such) she purchased for $500. Travel expenses of $15,000 for photography trips she took to Asia to build content. Part of the mortgage associated with where she setup her video studio for $1,500. Deborah has the following outstanding questions she hopes you can answer: