Some input here from the tax professional (that's me): 1. I would say 812990 is the more appropriate code. The debate in our discipline notwithstanding, we're not considered a "profession" by most others and genealogical research doesn't really fall into the 514 series. Incidentally, the NCIS Manual is available at https://www.census.gov/eos/www/naics/ if anyone would like more details than just the list in the IRS instructions and publications. (As a side note, if you ever get in a dispute with the IRS their own instructions and publications are NOT considered valid authority; refer to the Internal Revenue Code itself for guidance.) 2. For tax purposes, books are generally non-depreciable assets because they have no specific useful life. I carry my own (the more spendy ones, anyway) as assets on the books, but that's just for the additional practice with depreciation and to give myself some NDAs to test my software from year to year. It's much easier to treat them as expensed items from the start. 3. You'll want to check every year on whether computer software is eligible for the 179 deduction. It is no longer eligible for "special depreciation," but that can change with the whims of the Congress. Again, most of it can be expensed but if you want to depreciate it, it has a 3-year asset life for tax purposes. 4. All income of any nature must be reported, of course. Where you record the expense is highly flexible (in the long run there is no penalty if you report an expense in the wrong category on a tax return unless it has a material effect). If you actually purchase a document and provide it to the client then you could make a case for recording it as Cost of Goods sold. I'd be more likely to just include it in "other expenses" -- suitably listed in the statement, of course. A good catch-all phrase is "reimbursable expenses," but that will work only if you itemize such reimbursable expenses on the client invoice. If you don't then they're still deductible but since you're not being specifically reimbursed you need to put them somewhere else. Again, it makes no real difference in the end, but if you happen to get audited and get one of the (very few) unreasonable examiners you'll win but not until after a good fight. For those on the list who are APG members, their very first webinar was produced by my colleague from the other side of the country, James Beidler, whose full-time job also is Enrolled Agent; this webinar is "Tax Considerations for Your Genealogy Business." It's a few years old, now, but still mostly valid. Later this year you can expect "Accounting for Genealogists," currently being designed by Yours Truly. This might end up being a two-part series, but we'll see; I won't be putting a *lot* of time into it until after tax season! If anyone has any specific tax or accounting questions you don't want to air in public, feel free to contact me directly. No charge for quick answers. Dave Liesse, EA Skingco Services, LLC (my current company) Central Tax & Business Services (the company I'm in the process of acquiring) On 3/6/2017 09:08, Teresa Kahle wrote: > Hello to all, > > Last year I transitioned to taking clients and now I am trying to get my taxes done. I have a few questions specific to our profession. (Preliminary data show I made a profit!) > > I am a single owner LLC, have no employees, office at home, nothing fancy going on. > > I used to work for H&R Block many, many years ago so know the basics and I’ve read all the relevant IRS Publications, but am nervous this being my first time to file for this business. > > 1. What Professional Activity Code do you use? > > 2. How do you deduct books? I’ve bought a ton of books this year. Some I am deducting as “Business start-up costs” but am not sure if the others are business deductions, 179 deductions, or if I need to depreciate them. The question seems to be is the book’s usefulness greater or less than one year? Do any of you go the depreciation route? > > 3. How do you deduct computer software? It appears to be a 179 deduction? > > 4. Where do you include the cost of obtaining certified records or DAR record copies or the cost of DNA testing you paid for on behalf of the client? > > > Thank you for any advice you can give, > > > Teresa S. Kahle > The Intrepid Sleuth > www.theintrepidsleuth.com > > “They who are indifferent as to their origin will likely be careless of their destiny.” - Edward W. Spangler, 1896 > > > > > > > > > > > ------------------------------- > To unsubscribe from the list, please send an email to TRANSITIONAL-GENEALOGISTS-FORUM-request@rootsweb.com with the word 'unsubscribe' without the quotes in the subject and the body of the message