It’s not that you wouldn’t claim any expenses that year, just exclude enough to put you over the edge of non-profitability. I think this only works if you’ve been teetering on the line for a while. Years of losses then a sudden windfall may be a red flag.
OTOH, how much effort does the IRS put into finding people who are getting away with a few hundred dollars in taxes - they catch the obvious ones, but do they check everyone carefully? There must be plenty of legit money-making-hobby types like a weekend artist or pottery maker who do actually teeter on profitability from year to year. Too many to look closely?
Well, first of all, each business needs it’s own Sch C.
Then, if the cooking business generates significant income, certainly the food bought for that can be deducted.
But if you or your family eat it,then no.
What if the family eats it, then give their reactions on video for the channel?
This is what I wonder about. If it’s thrown away, then it can be deducted, but if it’s eaten then it can’t be? I do understand the difference, and can see how that would be the case.
I guess the next step to not be completely a scam is to have another channel called “Dinner Time!” where you release videos of you and others eating the food.
The easiest thing would be to just lie, “yeah, I threw it away.” But if you’re going to lie about a little, then just lie about the whole thing and never record any videos.
Really though, this all still seams like lots of work for not much return. Based on a rough estimate of credit card charges, I think I spent about $6000 on groceries in 2020, and paid about 10% in income taxes. There are bound to be easier and more legal ways of earning $600.
Well, you could try that you had to eat it as a taste test, and if you included reaction shots at the end, that could fly.
Common minor audit issue for family restaurants with a large family, is taking some amount off CoGS for personal use.
That’s my thinking. I guess if you garner enough views to monetize the chanel, you could then use that to offset for-chanel expenses even if it’s a hobby.
Like and subscribe to subsidize my wagyu hamburger.
On a strict adherence of IRS rules, if the LLC is providing Joe and employee with food everyday, while the LLC could expense the food as a deduction, the LLC would need to include as income to Joe on his W-2 the market value of the food he was provided daily. So Joe would get the deduction for the food on the LLC books, but would have to pay tax on the market value of the meals he received and ate later that night.
So he actually may be in a worse situation, since the cost of the food to the LLC might be $25, but the market value of the prepared food might be $50.