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Category: income tax

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Constant overdrive

My strategic plan for 2022 seems to be in tatters. That’s the price of constant overdrive.

Skylarking, 24X36, oil on canvas, available.

At the end of last year, pastor Quinton Self challenged us to stop with the busy work and focus on what matters. That includes moments of rest. He and I are the same psychological profile (with the test scores to prove it), so when he zings me in a sermon, I figure he’s also talking to himself. In February, when he’d just finished a fast-paced, five-week teaching program on top of his other work, I asked him: “so, how’s that Sabbath rest thing going for you, PQ?” He smiled. It’s a constitutional problem for both of us.

Every year recently I’ve said, “this is the latest I’ve ever done my taxes.” This year’s record will stand. I can’t get much later and not file for an extension. That’s a terrible idea; it just prolongs the agony. What’s scary is that I didn’t even think about taxes until I was flying back from Phoenix two weeks ago.

Breaking Storm, 48X30, oil on canvas, available.

I had coffee with my Canadian pal Poppy Balser last week. I don’t really envy our Canadian neighbors their economic system. However, when I’m calculating income tax, I wish we could streamline our ponderous system and replace it with something like theirs. As a sole proprietor, I keep records on all kinds of things that are irrelevant to the average taxpayer—household repairs, utility bills, and the cost of operating my car.

It’s time-consuming and tedious, and I’m good with numbers. I can’t imagine what it’s like for my math-phobic fellow artists.

Admin is the curse of all sole proprietors. We write our own ads, maintain our own websites, do our own strategic planning, keep books, and somehow churn out a product. I am, for some reason, drowning in admin right now.

Wreck of the SS Ethie, 18X24, oil on canvas, available.

“Did I ever send you the materials for next year’s ad?” I asked Anthony Anderson of the Maine Gallery Guide yesterday. No, he replied, but if I can get it to him next week, I’ll be fine. I could hire my student Lori Galan or my old friend Victoria Brzustowiczto lay it out for me. Either of them would probably forgive me my hair-raising lateness. However, I don’t even have a clue what I want to say. And that ad is the most important one I’ll run all year.

Being in constant overdrive is corrosive. It forces a person to be reactive, batting balls back out as fast as they come in. Instead, intelligent people are proactive, thinking out a strategy and sticking with it.

I did that at the beginning of the year, by the way. It’s in tatters.

Beautiful Dream, 12X16, oil on birch panel, available.

But help is on the way. When we’re in overload, things have a way of falling on us and slowing us down. Another Canadian artist friend, Cathy LaChance, put it very succinctly when she was diagnosed with COVID this week: “My turn to be forced to rest.”

Call it the Universe, if you want; I prefer to credit God with this good design. 

The problem with frenetic people is that we are sometimes so busy we can’t hear the “still small voice” of God. That’s why it is often accompanied by the wind and earthquake (or COVID)—to get our attention.

I’d rather not wait that long.

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Artist with the soul of an accountant

There are some unique lessons to be found in the detritus of our COVID-year returns.

Cerro Fitz Roy and Cerro Electrico, painted in my extended sojourn in Patagonia last year. Available.

I like to tell people I’m an artist with the soul of accountant. This isn’t really true; I’m just making fun of my painting. I hate bookkeeping as much as the next guy.

This time of year, my accountant friend Laura Turner is doing a lot of tax returns. She likes it because each one is a small bit of history. I don’t share her enthusiasm for slogging through the minutiae of the tax code (which changes constantly), but auditing your own books does take you back.

Last year I wrote a lot of refund checks—$4,550.40 worth, to be precise. These were deposits for workshops, and they all went in a flurry in late Spring, as we realized the world was not going to open back up again. They represented future payments as well. Compared to others, my losses were small, but for me they were painful.

Cliffs, painted in Patagonia last year. Available.

My computer tells me to whom I issued those refunds. More than 80% of them turned around and bought something else from me during 2020—another workshop, a class, or a painting. There’s a lesson in that, one we can learn from our retail neighbors.

Modern big-box stores are open and easy about taking returns. Buy it, take it home and contemplate it. If you don’t like it, return it. My late friend Gwendolyn used to call it “buying on the American plan,” which tells you it’s not universal. It’s possible here because these retailers work in volumes so large that the cost of this goodwill gesture is relatively small.

Powerhouse on the Rio Blanco, painted in Patagonia last year. Available.

That is not true for the sole proprietor, whose operation may include unrecoverable deposits and expenses. But it’s still a good idea to issue refunds cheerfully when you can. It establishes your integrity and goodwill.

I’m conservative by nature. I prefer to do business as I always have. But in April 2020, I was forced to rethink that. Every gallery I did business with was closed, either permanently or temporarily.

I made my first diffident step in buying a license for something called ‘Zoom’. By June, I was confident enough to convert that to an annual license. It was the best investment I’ve ever made.

Rain, painted in Patagonia last year. Available.

That month, I also bought a party tent and opened an ad hoc gallery in my driveway. I went on to have the best sales year I’ve ever had. Nobody is more surprised about that than me, but it speaks to a second essential truth: we usually have to be smacked upside the head to make positive change.

I think citizens should prepare their own tax returns so they have a notion of how the tax code actually works. My fellow Americans don’t agree; in 2018, only 43% of electronic filers did their own returns. Even those who use a tax preparer are responsible for laying out the bones of their story. Garbage in, garbage out, as they say.

I always hover above the ‘send’ key for a few moments, hoping I’ve remembered every important thing. Itemized returns are never perfect; there are always bits and bobs you mislaid and just don’t recall. But hopefully, I’ve written it more as a memoir and less as a novel.

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A tax break for artists?

Working artists are among the winners in this year’s tax season.
Don’t mind me; I’m just using details from old paintings to talk about how I feel about preparing taxes.

The 2017 Tax Cuts and Jobs Act may have been intended to simplify the tax code, but simple it is not. Still, it has a provision that affects you, if you declare income as an artist.

Self-employed artists fork over a payroll tax of 15.3 percent, which cover both sides of our Social Security and Medicare obligation. Corporate employees pay half that, with their employers covering the remaining half. The change was designed, on paper, to redress that.
More importantly, it preserved the historic tax advantage that sole proprietors had over C corporations. Prior to the passage of the bill, the top effective tax rates for C corporations was 50.47%; for sole proprietors, it was 40.8%. When the rate on C corporations dropped, it had to drop for sole proprietors too.

Starting with the taxes you’re doing for 2018, pass-through taxpayers (those who aren’t a corporation) are entitled to a deduction equal to 20% of the taxpayer’s qualified business income, pr profit. For some people, its calculation is going to be very complicated. Once the broad plan was in place, more and more widgets had to be added to make it fair.
Most of the limitations on the deductions won’t apply to the working artists who read this blog. Singles making less than $157,500 or joint filers making less than $315,000 in total taxable income can stop reading here; they get to take the full 20% deduction. (If you’re between those levels and the ones in the next paragraph, you get the deduction in a trimmed form.)
Singles making more than $207,500 or couples making more than $415,000 are subject to different rules. They get no deduction if their business is a personal service firm.
A personal service firm (SSTB) is “any trade or business involving the performance of services in the fields of health, law, accounting, actuarial science, performing arts, consulting, athletics, financial services, brokerage services, or any trade or business where the principal asset of such trade or business is the reputation or skill of one or more of its employees or owners.”
To me, that sounded like the very definition of a working artist, whose livelihood relies on his skill. And apparently, others were concerned that this was unduly broad, since it would apply equally to the machinist, riverboat captain, software designer and many other self-employed people. Fortunately, the IRS decided to define that catch-all phrase at the end very narrowly. You’re out of luck if you:
  • Endorse products or services;
  • Allow your name, likeness, etc. to be licensed to sell products like brushes, paints, or a teaching set of pastels;
  • Get paid to appear at events.

But even then, the only part of your income that’s excluded is the part you earned doing those endorsements.

    As Forbes wrote, “If you ain’t famous, as long as you don’t provide services in one of the specific disqualified fields, you are not in an SSTB, even if your skill or reputation is the only thing you have to sell.”
    Of course, it’s just a law, and it’s up to the courts to determine what it actually means. But until then, I’m going to feel fairly confident taking the deduction. A caveat—I’m an artist, not an accountant, so this advice is worth exactly what you’re paying for it.
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    Action vs. Reaction: the boring times in the studio

    Sometimes the balance between creativity and routine gets out of kilter, and it never seems to be in favor of creative time.
    Places I’d rather be right now: Headwaters of the Hudson, by Carol L. Douglas, which anyone who’s been to Lake Tear of the Clouds would recognize as a romantic personification rather than the real thing.

    I’m sorry there was no post yesterday. Grandchildren are human petri dishes, and mine gave me their norovirus. (That’s the nature of children, and I would change nothing.) I’m feeling better today, but not 100%.

    Ironically, I’d planned to write about action vs. reaction. Every job has moments of each designed into it. For example, the EMT who saves your life is mostly reactive, responding to what’s happening to you and the instructions he’s getting over his radio. The engineer designing a new system of 0s and 1s is mostly active. As he interacts with his team, though, he is reactive.
    But that’s in the particular. Generally speaking, most successful people are reactive much of the time. They’re listening to their competitors, their peers, and their customers, and trying to give the people what they want.
    Palm and Sand, by Carol L. Douglas
    The self-employed artist is stubbornly individualistic, but that doesn’t save him from reactivity. We treasure our active tasks, like painting or marketing, that we initiate and drive ourselves. Then there are tasks that are in response to others’ initiatives. For example, at 2 PM today, I must send an email. I don’t know why this particular moment is important to the organization but I do know that a small part of my mental energy today will be spent wondering whether gmail’s delayed-send feature really works.
    Painting commissions, while on the ‘creative’ side of our ledger, are fundamentally reactive tasks. This is why some artists don’t enjoy them as much as other work. The impetus, the spark of idea, didn’t originate with us.
    All sole proprietors exist in this maelstrom of action and reaction, which tug and vie for our scarce time.
    Spring, by Carol L. Douglas, painted down the road a piece, on an April day.
    Chief among the reactive tasks is bookkeeping, which I’d never do at all if the IRS didn’t prod me into it. Before I can file my taxes, I must audit my records to determine if they’re true. The whole job takes me the better part of a week. I think I should try doing the audits monthly. However, every February, I am so happy to be free of bookkeeping that I just go back to the Excel equivalent of stuffing receipts in an envelope.*
    This year I decided to try to paint in the mornings and work on bookkeeping in the afternoons. This was a total failure. I would just settle in to my canvas and it would be time to move over to the dining room and its carefully separated piles of papers.
    I’m back to my usual technique, which is to schedule tax prep during the nicest week of winter weather. It’s a knack, I tell you.
    Why can’t I just ignore my taxes for a week and get back to them when the weather gets bad? Despite my protestations that I wouldn’t do this to myself again, I’ve arranged to be shot out of a cannon again this spring. On March 4, I’m leaving for a short painting trip through Alabama, Mississippi and Louisiana. My third daughter is getting married in May. And after that is my regularly scheduled season. It’s now or never, and the IRS doesn’t like never.
    Fall cookies for another daughter’s wedding. That won’t work for May!
    I have learned that tasks tend to be amorphous until they’re pinned down. That means that small ones, like “order paint” loom as large as “bake 1000 cookies for the wedding reception,” a job I will be doing without my designer pal Jane this year. Writing them down and classifying them helps me keep them in perspective.
    I’ve written before about Bobbi Heath’s time management system, here. It’s a simple system that can stop you from losing your mind when you’re overwhelmed. Whatever system works for you, now is a great time to deploy it, before the weather gets fine and you’re on the run.
    *I had a GPS that kept mileage records. I just retired it and bought MileIQ. It’s fantastic for the plein airpainter, who starts and stops and is pulled along by the wind.
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    The new tax bill and self-employed artists

    Are you losing all your deductions? Heck, no. The sky didn’t fall after all.

    More Work than They Bargained For (Isaac H. Evans), Carol L. Douglas, courtesy Camden Falls Gallery

    The last major tax reform occurred 27 years ago. Our combined household income was in the $10,000 range since my husband was in grad school. I can’t tell you what impact it had on my taxes, because I wasn’t filing by computer back then.

    This time around, I read daily reports of how this bill would eliminate the home-office deduction or other important considerations for the self-employed. Many of my artist friends were very troubled. It has done none of those things.
    I’m not a tax preparer. For heaven’s sake, don’t rely on this for tax planning. However, I’m keenly interested, because I prepare my own taxes. Anything that would simplify that would make me very happy.
    Spring at Rockport, Carol L. Douglas
    For many of my friends and family, the biggest change—and one that could cost them dearly—is the cap on state and local tax deductions at $10,000. People in other states used to boggle when I told them I paid $12,000 a year in property taxes in my middle-class neighborhood in New York. It’s one of the reasons I moved. (We still pay income tax to New York, for reasons that are too complicated to go into here.) For artists in New York, New Jersey and California who own their own homes, this cap could hurt.
    This will be offset to some degree by changes in the standard deduction and the income tax rate. I sat with a New York artist friend last week totting up her plusses and minuses on my fingers. I think she will be better off even with the property tax cap.
    Coast Guard Inspection (American Eagle), Carol L. Douglas, courtesy Camden Falls Gallery
    In most cases those households with five-figure property taxes will also see reductions in their tax rate. May they use their savings to buy more paintings.
    There are some other changes that might affect artists. One is the threshold for medical expenses, which temporarily drops back to 7.5%. There have been years where that would have mattered to me, and it’s a pity that it couldn’t have been cut permanently. It’s important to low-income people with catastrophic illnesses, especially in this era of high deductibles. My friend Barb will be happy that it’s retroactive to 2017, as she had to have emergency surgery this year.
    Winch (American Eagle), Carol L. Douglas, courtesy Camden Falls Gallery
    Casualty loss deductions are now limited to federal disaster areas. If a Nor’easter drops a spruce on your roof and your insurance doesn’t cover it, you’re out of luck. There are some other miscellaneous expenses you won’t be able to deduct, like unreimbursed job expenses or moving expenses.
    But as for Schedule C filers—which most of us artists are—the new tax bill appears to have helped, not hurt us. It provides an across-the-board 20% reduction of our business income before it gets transferred to our Schedule A. (The rest of its provisions appear aimed at higher fliers than me.)
    As far as I can see, the sky didn’t fall after all. But if you’re reading this differently from me, let me know in the comments.
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    Will the artist tax penalty be eliminated?

    Artists can’t take tax deductions for their donated work. Will that change?

    A Fitz Hugh Lane Day in Camden,12X9, oil on canvasboard, Carol L. Douglas

     Anyone who works in the arts is regularly asked by non-profits for donations of work. These organizations will often naively include a letter saying the donation is “tax-exempt.” That’s flat-out wrong. The deductibility of a created work is generally limited to the value of the canvas, paints and frame (which are so imprecisely measured that they have already been deducted as business expenses).

    I learned this the hard way. I took a deduction for a painting I’d donated to the fine conservation group, Ducks Unlimited. A kindly IRS auditor explained the facts to me—right before she struck out the deduction and totted up the interest I owed.
    It hasn’t always been this way. Before 1970, creators could deduct the fair-market value of the work they donated. According to a fascinating opinion piece by Michael Rips in the New York Times, the deduction was eliminated because former presidents were inflating the fair-market value of their papers.
    Unlike Presidents Lyndon Johnson and Richard Nixon, I can document the value of my artwork with a track record of sales. The paintings used to illustrate this post, for example, are among the hundreds I’ve sold in my career.
    Drying Sails, 10X8, oil on canvasboard, , Carol L. Douglas
    This anomaly of the tax code, which punishes artists for the sins of their social betters, is regularly discussed in Congress. Nothing ever happens, and nothing ever will happen. Artists don’t have the social muscle to force that change.
    But according to Rips, help may be on the way from a deliciously ironic source, the challenge of campaign spending laws by the conservative group Citizens United. That’s the case that has liberals’ panties in a twist about corporations being given the rights of people.
    More precisely, it held that our First Amendment freedom of speech rights prohibited the government from restricting independent political expenditures by a nonprofit corporation. Citizens United attempted to air a film critical of Hillary Clinton before the 2008 Democratic primary. This violated a Federal statute that prohibited corporations and unions from engaging in politicking.
    “Donations are a protected form of ‘symbolic speech’ (such as gifts of money, and flag-burning), and the withdrawal of the fair market tax deduction from the creators of those works is — under the precedent of Citizens United — a prohibited form of speaker discrimination,” wrote Rips, who, as a lawyer and novelist, is uniquely qualified to speak to the question. “The government would have to demonstrate a ‘compelling state interest’ for removing the deduction — nearly impossible when attempting to justify the denial of the fair market value deduction to those who donate their own work to cultural institutions.”
    Big Boned (Heritage), 16X12, oil on canvas, , Carol L. Douglas
    Rips and his pals are interested because of the negative effect this has had on new collections in American museums. I’m more interested in the ability of my fellow painters to support organizations in which they believe.
    I sincerely hope Michael Rips is right, but I’m not changing my strategy just yet. 
    Give if you support the organization’s goals, and if they can get a fair-market price for your painting. Give if the fund drive is chaired by your Great Aunt Helga. Just don’t give under the mistaken notion that you’ll get a tax deduction. 
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    Courting dementia

    By Carol L. Douglas

    Since I was a young woman, people have debated whether there’s a connection between aluminum and Alzheimer’s disease. Aluminum in cookware and in antiperspirant were both singled out as possible triggers for dementia. Recently, a reader sent me a link to a story that screamed: “Doctors Now Have Warning: If You Use Aluminum Foil, Stop It or Face Deadly Consequences.”

    I have no comment on the food safety of aluminum foil, although I doubt that Faithpanda.com is peer-reviewed. My Dear Reader sent it to me because she knows that when online political conversations get too stupid, I put on a virtual aluminum hat to block the signals.
    This sometimes takes the form of a small still life I did several years ago, above. When I can’t make time to paint, I do these small paintings to keep my mind and hands limber. They never take more than an hour. They’re just intended for my personal amusement.
    By Carol L. Douglas
    This week, I can’t even paint still lives. The days are getting longer, which means it will soon be time to go outside to paint. But looming over every March day, like a great black blot on the landscape, is our income tax return.
    “In bouillabaisse you are likely to find almost anything, from a nautical gentleman’s sea-boots to a small China mug engraved with the legend â€˜un cadeau de Deauville,’” wrote PG Wodehouse, and the same is true of our tax code. And just like Bertie Wooster faced with that soup, we shrink from stirring it.
    “Taxes are what we pay for civilized society,” is a quote from Supreme Court Justice Oliver Wendell Holmes, Jr. It came from a legal decision written in 1927, and it’s inscribed over the door of IRS headquarters. Holmes was born in 1841 and served in the Civil War. I doubt he’d recognize much about the modern tax code.
    By Carol L. Douglas
    I doubt he’d be able to even file it. About 56% of American taxpayers rely on paid preparers to do their return. Another 34% use tax preparation software, making a total of 90% of taxpayers who seek some form of help. Revenues for the tax preparation industry (the people, not the software) are around $10 billion a year. That’s because nobody who’s not a trained preparer can understand the tax code.
    I do not mind paying my taxes, but I do mind the endless record-keeping necessary to keep from paying too much. I mind the occasional midyear summonses to explain myself, and I especially mind the fact that I get to pay income tax in more than one state.
    At any rate, as you probably already suspect, there won’t be much painting done this week in my studio. If you want me, I’ll be at the dining room table, courting dementia.
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    The tax collector

    “Focus,” 2009, flashe on gessoboard by Susan Crile.

    “Focus,” 2009, flashe on gessoboard by Susan Crile.
    Susan Crile ought to be the patron saint of artists. Despite being in the collections of the Metropolitan, the Guggenheim, and other museums, the IRS decreed that her work was “an activity not engaged in for profit.” She owed $81,000 in back taxes for five years’ returns. Ultimately, Crile lawyered up and prevailed. In 2014, the tax court ruled that Crile had “met her burden of proving that in carrying on her activity as an artist, she had an actual and honest objective of making a profit.”
    Through her art, Crile has been an outspoken critic of our war conduct, raising awareness of the human and environmental damage being done in the name of the American people. A cynic could be excused for wondering if her politics had anything to do with her tax question.
    Years ago I had the hobby-vs-career conversation with an IRS auditor. She couldn’t have been nicer, but she made it clear that I needed to earn more or stop taking the self-employment deduction. For non-artist readers, that might be an oh-duh point. Why work if not to make as much money as you can?
    “Daylight Darkness,” 1991, charcoal and pastel on paper, by Susan Crile.

    “Daylight Darkness,” 1991, charcoal and pastel on paper, by Susan Crile.
    Such a threat shapes your work by reducing your tolerance for risk. It was at that point that teaching became so important for me, because teaching gives you a reliable taxable income. So does painting “safe” work, which Ms. Crile was decidedly not doing. The Crile decision gave us back the room to take risks, which is a very big part of artmaking.
    It’s not just artists who make the choice to operate at a loss for a while. This happens with any project that bleeds money at the research and design phase. Investors know the potential rewards outweigh the high risks.
    For me, letters from the IRS are an almost-annual rite. Being self-employed makes me a high audit risk. It’s part of the cost of doing business.
    “Guantanamo: The Black Box Detainee with Stinging Insects,” 2010, black gesso, acrylic and white chalk on paper, by Susan Crile.

    “Guantanamo: The Black Box Detainee with Stinging Insects,” 2010, black gesso, acrylic and white chalk on paper, by Susan Crile.
    This year was unique because, as of the end of October, I had two IRS inquiries outstanding. The first was trivial: they didn’t have a record of a payment. I sent them a copy of the check, expecting it to go away. So yesterday, when I received a demand for the money—with interest—I started to boil. “They’re really on your case,” my accountant friend observed mildly.
    Well, actually, they aren’t. It was an ordinary cock-up where their computer is outrunning their staff. Their representative couldn’t have been more diligent in researching the problem. However, it consumed hours of my time and gave me the sour stomach and headache one gets from interfacing with an intergalactic power. And of course it ain’t over until I get the final notice in the mail.
    I personally don’t think our Federal taxes are too high, but I do think they’re way too complicated. They either eat up time that the taxpayer could be using elsewhere, or eat up the money he uses to pay lawyers and accountants. I think they also encourage people to overpay. I’ve heard many times from friends that they don’t take every deduction to which they’re entitled because they’d rather not be in the IRS’ sights.
    Why do we tolerate this system, I ask as my paints dry up on my palette.
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    It’s tax season

    Plein air painters drive around until they find what they want to paint, and then they stop and paint it. That makes absolutely no sense to auditors. This is my dearly-missed painting pal, Marilyn Feinberg, in Naples, New York.
    I get a “how to succeed in art” newsletter. A few weeks ago, they sent a sample schedule out. It included time for making and marketing, but no allowances were made for recordkeeping.
    I love the time I spend zooming around from plein air event to plein air event in my elderly Prius. However, summer generates not only revenue but receipts. Eventually they all have to be entered in my books.
    A scene on the same road, above. They don’t magically happen; you have to look for them.
    Some people do that as they go; I prefer to collect a stack of papers and curse at them in March. Not only do I do my income tax and sales tax returns, I also look at our investments and determine if they need to be redeployed. At the end of this, I clear out and reorganize my files, which is why Easter is the one meal we’re able to have at our dining room table.
    There was a time when we had a single, standard currency. Although our financial system is pegged to the dollar, we now use credit cards and EFTs more than we use cash. That’s convenient, but it means that we must check credit card statements, Paypal, Amazon, bank statements, EZ pass records, and cash receipts.
    A recent tax ruling involving artist Susan Crile validates the idea that artists regularly lose money in the pursuit of future success. This is only fair, since the IRS eagerly taxes those of us whose ship has come in.  But before you can deduct your expenses, you must keep track of them. It’s persnickety business.
    And you don’t get beautiful paintings without generating a rather ugly stack of receipts.
     â€œI don’t have a destination,” I once told an IRS auditor. “I drive until I find a view to paint, and then I stop and I paint it.” She couldn’t find a reason to disallow that on the spot, but she warned me that my future mileage logs better include destinations. Now my GPS unit logs my mileage—as longitude and latitude points, which are converted into addresses with software my husband wrote for me.
    But most people don’t have a software guru at home, nor should making a living be such an exercise in appeasing government inspectors. I spend about a hundred hours a year on record-keeping to satisfy the IRS. How does that advance art, or advance the American economy?

    Let me know if you’re interested in painting with me on the Schoodic Peninsula in beautiful Acadia National Park in 2015 or Rochester at any time. Click here for more information on my Maine workshops! Download a brochure here.
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    Hobby losses

    The Au Sable River at Jay, 12X9, oil on canvasboard. Painted on the side of the road in Jay, New York.
    I once had the following discussion with an IRS auditor:
    She: “Your mileage log doesn’t identify destinations. You need to show destinations.”
    Me: “I’m a plein airpainter. There are no ‘destinations’. I drive until I find what I want to paint, and then I paint it. The best I could come up with is something like ‘cows at the side of the road’.”
    She (unmoved): “For the purposes of a mileage log, you need to show destinations.”
    Teaching on the side of a road somewhere near Lincolnville, ME.
    At the end of the interview, she suggested to me that I’d better start showing a profit or the IRS would consider my work a hobby. She was (contrary to popular opinion) very nice. But I am keenly aware that my tax returns are a red flag: we have high W2 income and Schedule C losses.
    That’s actually typical for artists. Even the most successful of us usually do something else, like teaching or graphic design, to cobble a living together. But if you ask us our profession, we are artists. The big money on our work will be made after we’re dead. Denying us the tax advantages other businesses get is adding insult to injury.
    Sunset over Saranac Lake, by little ol’ me. Painted on the side of a road somewhere in the Adirondacks.
    In 2010, the IRS accused Professor Susan Crile of underpaying her taxes by more than $81,000, saying that her work was not a profession but something she did as part of her job teaching Studio Art at Hunter College. (See Forbes’ coverage hereand here, and the NY Times’ coverage here.)
    The IRS’ determination was based on her lack of a written business plan (!) and the idea that she made art not primarily to sell but to keep her job as a teacher. Never mind that her work hangs in the Metropolitan Museum, the Guggenheim, the Brooklyn Museum, the Phillips Collection, the Hirshhorn, and at eight colleges and universities. 
    Painting at the side of the road near Lake Placid, NY.
    Mercifully, the judge saw it differently:
    She has worked for more than 40 years in media that include oil, acrylic, charcoal, pastels, printmaking, lithograph, woodcut, and silkscreen. She has exhibited and sold her art through leading galleries; she has received numerous professional accolades, residencies, and fellowships; and she is a full-time tenured professor of studio art at Hunter College in New York City. (Judge Albert Lauber)
    “Bottom line is that, in general, lawyers have much better educations than accountants,” wrote Peter J Reilly. He went on to note that Judge Lauber holds an MA in Classics from Clare College, Cambridge.
    Painted at the side of a road in Camden, ME. (Available from Camden Falls Gallery)
    While Professor Crile has prevailed on the Section 183 (hobby loss) question, she still has to answer the question of how much of the quarter million or so in losses she claimed over the last five years will be deemed legitimate. That’s a reminder to us to be honest, even conservative, in our bookkeeping.

    Message me if you want information about next year’sclasses and workshops.