Can I Claim Money Making Methods as Business Expense?

Just wondering if I can put money making methods that I purchased on blackhatworld under business expense?

What about membership sites such as dominateIM, can I put that under business expense too?

What about EPN accounts... LOL.

only if you're making money LOL

yes you should be able to. it's just like if you were a programmer and bought a programming book.

Yes, you can claim they are expenses.

Everyone of them... Lets say you purchase a method for cookie stuffing for $500 and do not make a dime off it. That is a total legit business expense as if you had made money on it you would have paid taxes on the revenue. I have gotten this cleared by 2 certified accountants..

Yep of course it is, hell some people I know writeoff access to porn sites as "competitor research"

CiscoKid said:

Everyone of them... Lets say you purchase a method for cookie stuffing for $500 and do not make a dime off it. That is a total legit business expense as if you had made money on it you would have paid taxes on the revenue. I have gotten this cleared by 2 certified accountants..

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I will have to differ to this answer. If you pay $500 to learn a recipe for cookies, yet you do not use it or make any income from it then you can not legitimately write it off. Now you may be able to write it off if you already sell cookies and need this recipe to see how it differs from your cookies.

Such as with the porn sites. Yes, you could legitimately write it off if you are somehow affiliated with the porn industry and can prove it is a legit expense. You may get away with illegal write offs, but just wait till your lotto number comes up and you are pulled into an audit.

so in other words if what you are buying helps increase your revenue or starts you making money then yes you can write it off. However if you join a porn site and you make money by selling cookies, then this is not a legit expense.

The threshold to which the IRS will hold you to is this: "Is your business expense both ordinary necessary?" Ordinary is defined as "common and accepted in your industry." Necessary is defined as "helpful and appropriate." Do the methods you purchase meet all of these criteria? HELL YES! You won't have any problems deducting these expenses.

If you want the actual document describing all of this from the IRS go here, http://www.irs.gov/pub/irs-pdf/p535.pdf

iamblackhat said:

Just wondering if I can put money making methods that I purchased on blackhatworld under business expense?

What about membership sites such as dominateIM, can I put that under business expense too?

What about EPN accounts... LOL.

Click to expand...

iamblackhat said:

Just wondering if I can put money making methods that I purchased on blackhatworld under business expense?

What about membership sites such as dominateIM, can I put that under business expense too?

What about EPN accounts... LOL.

Click to expand...

Yes, absolutely. But do you really want to leave such an obvious paper trail of your black hat activity?

Actually, yes. Regardless of how you make that money the fact is that you must report to the IRS your income and expenses. They don't care how you make it (give or take...), but they certainly care if you report it correctly. I'm not really sure who would care about an "obvious paper trail."

misterajc said:

Yes, absolutely. But do you really want to leave such an obvious paper trail of your black hat activity?

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innocent said:

The threshold to which the IRS will hold you to is this: "Is your business expense both ordinary necessary?" Ordinary is defined as "common and accepted in your industry." Necessary is defined as "helpful and appropriate." Do the methods you purchase meet all of these criteria? HELL YES! You won't have any problems deducting these expenses.

If you want the actual document describing all of this from the IRS go here,

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This is a good explanation.

Also, it helps to have a business license/corp/llc or something similar. So if you're an "internet entrepreneur" anything you spend online could be a tax deduction as "market research".

My father who was an entertainer used to deduct all of his travel expenses, because he'd go see a show on the road, then the trip would become a business expense.

Good advice above from Cathy and others, so I'll just add one more thing:

I was audited last year for several years of returns and had a very hard time supporting deductions for trading software and the data feeds that I use as a day trader. The agent's issue was that my "occupation" and "business description" not only did not include trading, but it was impossible for me to be a trader without a certification. He knew nothing about private account trading and my expenses was eventually allowed, but when it's audit time, they are incredibly narrow-minded and not terribly well-educated when it comes to running a business with multiple streams of income. Just allow enough breadth in your business industry description to cover it.

It's actually not even necessary that you earn income from something you did to write it off as an expense. What is important in that case is INTENT. If you buy something for your business with the INTENT of using that to make money, and meets the above mentioned criteria of "necessary" and "ordinary", it should be able to be written off.

I would add that its worth it to pay someone that knows how to take advantage of all these suggestions and let them figure it out for you. Even if you have to pay someone, if you find the right person you will come way out ahead in the end.

I know my accountant has done some things I would never have known were possible and saved me waaaay more than what I paid for her service.

You can claim as expenses however to be safe you should have receipts for all the stuff your claiming in case of an audit (if you don't have receipts in audit, you will owe back taxes, according to IRS you can only expense stuff that you have receipts for)

innocent said:

Actually, yes. Regardless of how you make that money the fact is that you must report to the IRS your income and expenses. They don't care how you make it (give or take...), but they certainly care if you report it correctly. I'm not really sure who would care about an "obvious paper trail."

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Depending on what your buisness was I think the only people who might care is affil's, cpa's, and the likes. I wouldn't worry about it to much though, Documentation is key. If you keep good records then if anything where to happen just hand over what you have and they should have a hard time putting a case. I have known a few people that I knew would pay each other for really nothing just to write it off which after a while it was noticed and they both got fined.

You can go and get a coffee with someone, talk about business for 2 mins and write it off as a business expense.

Hi,

At the end of the day, the more you can claim as expenses, the less you're taxed upon.
That said, make sure that whatever you claim for, you can back up the claim if asked.

I've got both adult and non-adult activities, online and actual customer facing activities - so I claim for every coffee and lunch, everything from a hardware store as repairs etc.
I do join competitor adult sites to check out their mechanisms, user interfaces etc - so yes they're expenses.
Every ebook, audio and membership I pay for, I also claim.

I'm unsure where you're based, I'm in the UK - I base my day-day accounts, expense claims etc upon the information requested in the tax return - trying to avoid the 'other' categories as much as possible, as these are the ones that will be noticed and checked first.

Hope that helps,

Si

These mentions of audits are another reason it's good to use a pro for your taxes. If you're pushing your luck with a deduction, he'll know and recommend against it, or recommend how best to present it. If you get audited and used a pro, you are much more likely (in my opinion and from what I've heard) to have a happy outcome, since the pro can go with you and speaks their lingo. They can quote regs, etc. and present the audit guy with your side of things far better than you can. Believe it or not, in spite of the enormous size and detail of the tax code, some things are still open to interpretation to a larger degree than you'd believe.

An example: I totally screwed up and forgot to file an important form once, and my guy said "no problem, just file this and say this, then they'll let you file what you forgot with no problem, no fine, no nothing." And he was right, and I didn't lie or stretch the truth even. If I had just sent it in late, I would've been hit with a monthly fine for each month it was late. Hell, he didn't even bill me for the question and it saved me like $600 or something.

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DISCLAIMER: I'm not an attorney, CPA, tax guy, etc., and can barely even find my keys in the morning, so this is just FYI and I don't make any claim, warranty, guarantee that it is accurate. Always consult a professional. That's what they're there for, and the good ones are worth it.