I’m thinking about trying to fund an art project via Kickstarter.com. For the record, I live in California.
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Are the funds received just considered ordinary income? In other words, I have to pay taxes on the funds, correct?
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Can I deduct my parts and supplies costs because I’m an artist? I am selling “levels”; in this case I’m giving a t-shirt away at the lowest funding level, (also the parts cost for the actual art project).
I’m purchasing tools which I am using for this project.
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Can I deduct the cost of these tools?
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Assuming I can deduct the cost of these tools, at what dollar amount do the tools become “capital equipment”?
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How many years do you depreciate the capital equipment?