Jim Henderson wrote:
> That's sales tax, not income tax. 

That's not what I'm talking about.  I'm talking about income tax.

> From a personal income tax standpoint, 
> the law states that < $600 isn't taxed (at the federal level, state laws 
> may differ).

Yes. But $60,000 is, even if it comes from 200 different contract jobs. 
Don't you think?  I mean, I'm not going to sit down and grub thru the income 
tax laws *again*, since I just finished that earlier this week, but it 
wouldn't make sense, would it?

> I don't know that it was the IRS that we had to talk to - seems it was 
> someone here in the state of Utah offices, not the feds.

503(c) is a reference to the IRS tax laws, just like 401(k) is. I don't 
doubt you talked to someone in the Utah offices also.

>> Did you take them as an individual, or a corporation, or what?
> Individual.

Well, a corporation has to report everything, even if they don't get a 1099.

As an individual, I don't see anything on 1099-MISC that says the amount 
isn't taxable. It looks like it goes into Schedule C, according to the 
instructions.

Now, if it's <$600, you don't get a 1099 at all, but I'm pretty sure that 
doesn't *legally* let you off the hook for reporting it. It just means the 
IRS isn't going to be able to catch you easily.

>> One payment of $500 to an individual will likely not get you in trouble.
>> You're supposed to report it, but there's no proof.
> 
> The 1099 that the publisher submitted clearly stated that there was no 
> tax liability that they reported, and did include the figures IIRC for 
> the amount of royalties.

Huh. Very weird. Because that's not anywhere on the 1099. I can't imagine 
they *did* send you a 1099 and you didn't have to report the income.

I do love box 13 for 2009: "Excess Golden Parachute Payments."

-- 
   Darren New, San Diego CA, USA (PST)
   There's no CD like OCD, there's no CD I knoooow!

Post a reply to this message

On Thu, 02 Apr 2009 20:08:08 -0700, Darren New wrote:

> Jim Henderson wrote:
>> That's sales tax, not income tax.
> 
> That's not what I'm talking about.  I'm talking about income tax.

So am I.  But you said:

"Otherwise, you wouldn't pay income tax if you had 10,000 customers a 
year each buy $20 of stuff from you."

*That* is sales tax.

>> From a personal income tax standpoint, the law states that < $600 isn't
>> taxed (at the federal level, state laws may differ).
> 
> Yes. But $60,000 is, even if it comes from 200 different contract jobs.
> Don't you think?  I mean, I'm not going to sit down and grub thru the
> income tax laws *again*, since I just finished that earlier this week,
> but it wouldn't make sense, would it?

Does *anyone* think the tax laws make sense?  I sure don't.

>> I don't know that it was the IRS that we had to talk to - seems it was
>> someone here in the state of Utah offices, not the feds.
> 
> 503(c) is a reference to the IRS tax laws, just like 401(k) is. I don't
> doubt you talked to someone in the Utah offices also.

Well, like I said, I'd have to check with our treasurer.  She said she 
"got it sorted out with the state", so I assume the state issued the 
certificate, and the feds accept that.

>>> Did you take them as an individual, or a corporation, or what?
>> Individual.
> 
> Well, a corporation has to report everything, even if they don't get a
> 1099.

Yes, but we were talking about individual income tax?

Oh, wait, I think I see now where the misunderstanding is.  We're talking 
at cross-purposes again.  We got on the subject of income tax and I 
assumed "individual" and you are talking about for an entity, not an 
individual.

> As an individual, I don't see anything on 1099-MISC that says the amount
> isn't taxable. It looks like it goes into Schedule C, according to the
> instructions.
> 
> Now, if it's <$600, you don't get a 1099 at all, but I'm pretty sure
> that doesn't *legally* let you off the hook for reporting it. It just
> means the IRS isn't going to be able to catch you easily.

I got a 1099 for <$600.

But I suppose "not going to be able to catch you easily" also translates 
to "not worth their while".

But on my individual income taxes back when I got the advance (which was 
more than $600 and I got nailed for the taxes, or would have if the 
expenditure hadn't been tax-deductible), I talked to a tax accountant 
about the situation, and he explained it to me then.

Now that was almost 15 years ago, too.

>>> One payment of $500 to an individual will likely not get you in
>>> trouble. You're supposed to report it, but there's no proof.
>> 
>> The 1099 that the publisher submitted clearly stated that there was no
>> tax liability that they reported, and did include the figures IIRC for
>> the amount of royalties.
> 
> Huh. Very weird. Because that's not anywhere on the 1099. I can't
> imagine they *did* send you a 1099 and you didn't have to report the
> income.

Now I'll have to find the form.   It may be that I'm just remembering the 
boxes saying "0" for what was owed on it.  We did file our taxes before 
that one came in, though - I think this year it was actually < $100.  
Nonfiction books for a very small segment of a targeted market segment 
tend not to be real moneymakers.  Just a good way to get your name known

> I do love box 13 for 2009: "Excess Golden Parachute Payments."

LOL, that's a good one.

Jim

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Jim Henderson wrote:
> On Thu, 02 Apr 2009 20:08:08 -0700, Darren New wrote:
> 
>> Jim Henderson wrote:
>>> That's sales tax, not income tax.
>> That's not what I'm talking about.  I'm talking about income tax.
> 
> So am I.  But you said:
> 
> "Otherwise, you wouldn't pay income tax if you had 10,000 customers a 
> year each buy $20 of stuff from you."
> 
> *That* is sales tax.

I'm confused. I said income tax, you said sales tax. The two are unrelated.

> Does *anyone* think the tax laws make sense?  I sure don't.

I'm pretty sure the owner of the local gas station pays income tax, even tho 
he *never* gets a 1099, yes?

> Well, like I said, I'd have to check with our treasurer.  She said she 
> "got it sorted out with the state", so I assume the state issued the 
> certificate, and the feds accept that.

That's possible, but the designation as a 503(c) organization is an IRS thing.

>>>> Did you take them as an individual, or a corporation, or what?
>>> Individual.
>> Well, a corporation has to report everything, even if they don't get a
>> 1099.
> 
> Yes, but we were talking about individual income tax?

Yes.

> Oh, wait, I think I see now where the misunderstanding is.  We're talking 
> at cross-purposes again.  We got on the subject of income tax and I 
> assumed "individual" and you are talking about for an entity, not an 
> individual.

I'm talking about both. If your job is buying $50 parts, fixing them, and 
selling them for $100 on eBay, and you make $100,000 a year doing that, are 
you paying income tax? Sure. Who reports your sales to the IRS? Nobody but 
you. That's what I'm saying.

>> Now, if it's <$600, you don't get a 1099 at all, but I'm pretty sure
>> that doesn't *legally* let you off the hook for reporting it. It just
>> means the IRS isn't going to be able to catch you easily.
> 
> I got a 1099 for <$600.
> 
> But I suppose "not going to be able to catch you easily" also translates 
> to "not worth their while".

Possibly. But I'm trying to distinguish between "practically get in trouble" 
and "is illegal."  If I rent a DVD and show it on the big-screen TV at my 
sports bar, I'm also violating copyrights legally and also unlikely to get 
in trouble for it.

> But on my individual income taxes back when I got the advance (which was 
> more than $600 and I got nailed for the taxes, or would have if the 
> expenditure hadn't been tax-deductible), I talked to a tax accountant 
> about the situation, and he explained it to me then.

It's possibly because it was an advance, and you would have had to pay it 
back had you not finished the book, or something like that. I.e., it might 
have had nothing to do with the amount and more to do with when you were 
officially booking the income.

> Now I'll have to find the form.   It may be that I'm just remembering the 
> boxes saying "0" for what was owed on it.

1099's don't have a "how much you owe" box on them. Just google for "form 
1099" and suck it down off the IRS website.

> Nonfiction books for a very small segment of a targeted market segment 
> tend not to be real moneymakers.  Just a good way to get your name known

Sounds that way. :-)

>> I do love box 13 for 2009: "Excess Golden Parachute Payments."
> LOL, that's a good one.

I think it's the whole AIG thing.

-- 
   Darren New, San Diego CA, USA (PST)
   There's no CD like OCD, there's no CD I knoooow!

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On Thu, 02 Apr 2009 20:46:51 -0700, Darren New wrote:

> Jim Henderson wrote:
>> On Thu, 02 Apr 2009 20:08:08 -0700, Darren New wrote:
>> 
>>> Jim Henderson wrote:
>>>> That's sales tax, not income tax.
>>> That's not what I'm talking about.  I'm talking about income tax.
>> 
>> So am I.  But you said:
>> 
>> "Otherwise, you wouldn't pay income tax if you had 10,000 customers a
>> year each buy $20 of stuff from you."
>> 
>> *That* is sales tax.
> 
> I'm confused. I said income tax, you said sales tax. The two are
> unrelated.

I know.  My point is that the tax you collect and pay on "stuff" that 
people buy from you in the quantities you are talking about is sales 
tax.  10,000 customer *buying* $20 of stuff from you requires that you 
pay sales tax, not income tax.

>> Does *anyone* think the tax laws make sense?  I sure don't.
> 
> I'm pretty sure the owner of the local gas station pays income tax, even
> tho he *never* gets a 1099, yes?

He would pay personal income tax, sure - because his business would 
generate an 1099 for him.

>> Well, like I said, I'd have to check with our treasurer.  She said she
>> "got it sorted out with the state", so I assume the state issued the
>> certificate, and the feds accept that.
> 
> That's possible, but the designation as a 503(c) organization is an IRS
> thing.

Yes, that makes sense. But that doesn't necessarily mean the feds get 
involved when one is created.

>>>>> Did you take them as an individual, or a corporation, or what?
>>>> Individual.
>>> Well, a corporation has to report everything, even if they don't get a
>>> 1099.
>> 
>> Yes, but we were talking about individual income tax?
> 
> Yes.

So I'm not clear as to how we're getting them conflated.

>> Oh, wait, I think I see now where the misunderstanding is.  We're
>> talking at cross-purposes again.  We got on the subject of income tax
>> and I assumed "individual" and you are talking about for an entity, not
>> an individual.
> 
> I'm talking about both. If your job is buying $50 parts, fixing them,
> and selling them for $100 on eBay, and you make $100,000 a year doing
> that, are you paying income tax? Sure. Who reports your sales to the
> IRS? Nobody but you. That's what I'm saying.

If that's your job, then you *should* be working for a "company" entity, 
even if it's a sole proprietorship and you're the only employee.  That 
way if the business tanks, it's the business' finances that are hosed and 
not your personal when you file for bankruptcy.

So you - as the business - are responsible (as I understand it) for 
reporting the business' income as an entity (quarterly as I understand 
it) and then as an individual you are responsible for reporting your 
salary from your business (and the business is responsible for reporting 
that as well and dealing with withholdings and such).

I know a few folks who are independent consultants, and they all seem to 
have incorporated a business for this purpose, as well as paying an 
accountant to help them keep their books.

>>> Now, if it's <$600, you don't get a 1099 at all, but I'm pretty sure
>>> that doesn't *legally* let you off the hook for reporting it. It just
>>> means the IRS isn't going to be able to catch you easily.
>> 
>> I got a 1099 for <$600.
>> 
>> But I suppose "not going to be able to catch you easily" also
>> translates to "not worth their while".
> 
> Possibly. But I'm trying to distinguish between "practically get in
> trouble" and "is illegal."  If I rent a DVD and show it on the
> big-screen TV at my sports bar, I'm also violating copyrights legally
> and also unlikely to get in trouble for it.

Well, that depends on if Jack Vallenti is a patron or not. ;-)

But I see what you're saying.

>> But on my individual income taxes back when I got the advance (which
>> was more than $600 and I got nailed for the taxes, or would have if the
>> expenditure hadn't been tax-deductible), I talked to a tax accountant
>> about the situation, and he explained it to me then.
> 
> It's possibly because it was an advance, and you would have had to pay
> it back had you not finished the book, or something like that. I.e., it
> might have had nothing to do with the amount and more to do with when
> you were officially booking the income.

Even as an advance, it was taxable income unless it was used to cover 
business expenses - which in my case it was.  I probably could have made 
it much simpler by incorporating myself, but for one book that seemed 
like overkill.

>> Now I'll have to find the form.   It may be that I'm just remembering
>> the boxes saying "0" for what was owed on it.
> 
> 1099's don't have a "how much you owe" box on them. Just google for
> "form 1099" and suck it down off the IRS website.

Hmm, I might be thinking of box 4, which I see is the amount withheld.

>> Nonfiction books for a very small segment of a targeted market segment
>> tend not to be real moneymakers.  Just a good way to get your name
>> known
> 
> Sounds that way. :-)

Yeah.  It did work to get my name out there in that particular part of 
the customer base, no doubt about it. :-)  In a way it's like Ward 
Christenson (developer of XMODEM) said to me once on CompuServe when I 
asked if he was *that* Ward Christenson - he said "yeah, that and $0.25 
will get me a diet Coke".  :-)

>>> I do love box 13 for 2009: "Excess Golden Parachute Payments."
>> LOL, that's a good one.
> 
> I think it's the whole AIG thing.

I had a similar thought. :-)

Jim

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Saul Luizaga <sau### [at] netscapenet> wrote:

>
> I simply find it not fair at all POV-Ray not being donationware.
>
Those are my sentiments, too. The program is *so* amazing (and I spend so much
wonderful time at it) that I would like to donate as well. Yet I see the
logistical problems that have been mentioned here (who to give it to, how it
would be distributed among POV-team members past and present, etc.)

But one thing hasn't been mentioned yet: Say one of us writes a piece of
commercial software that incorporates POV-Ray as its "rendering engine" (or
whatever.) If I'm not mistaken, there are legal mechanisms already in place
whereby the "POV-Ray entity" (corporation, or whatever it is) profits from that
in some way. So it seems to me that there might be some kind of monetary
distribution scheme already in place, re: the development team. IF so, I can't
see how voluntary donations would be much different from that, insofar as how
the donations might be distributed.

KW

Post a reply to this message

Jim Henderson wrote:
> I know.  My point is that the tax you collect and pay on "stuff" that 
> people buy from you in the quantities you are talking about is sales 
> tax.  10,000 customer *buying* $20 of stuff from you requires that you 
> pay sales tax, not income tax.

So, if you make a living selling stuff at $20 a pop, you don't have to pay 
income tax no matter how much you'd make?

>>> Does *anyone* think the tax laws make sense?  I sure don't.
>> I'm pretty sure the owner of the local gas station pays income tax, even
>> tho he *never* gets a 1099, yes?
> 
> He would pay personal income tax, sure - because his business would 
> generate an 1099 for him.

Not if it's not a corporation. You don't issue a 1099 to yourself from yourself.

>>> Well, like I said, I'd have to check with our treasurer.  She said she
>>> "got it sorted out with the state", so I assume the state issued the
>>> certificate, and the feds accept that.
>> That's possible, but the designation as a 503(c) organization is an IRS
>> thing.
> 
> Yes, that makes sense. But that doesn't necessarily mean the feds get 
> involved when one is created.

Not necessarily, but they do. :-) It's a federal law that allows you to not 
pay income tax on your corporation or organization. I'm not sure why you 
wouldn't think the feds are involved in at least some sense.


>>>>>> Did you take them as an individual, or a corporation, or what?
>>>>> Individual.
>>>> Well, a corporation has to report everything, even if they don't get a
>>>> 1099.
>>> Yes, but we were talking about individual income tax?
>> Yes.
> 
> So I'm not clear as to how we're getting them conflated.

Because an individual can't be a non-profit organization?

> If that's your job, then you *should* be working for a "company" entity, 
> even if it's a sole proprietorship and you're the only employee. 

It doesn't work that way. If you're a sole proprietor, you don't have a 
separate EIN for the business.

> That 
> way if the business tanks, it's the business' finances that are hosed and 
> not your personal when you file for bankruptcy.

That would be a corporation.

> So you - as the business - are responsible (as I understand it) for 
> reporting the business' income as an entity (quarterly as I understand 
> it) and then as an individual you are responsible for reporting your 
> salary from your business (and the business is responsible for reporting 
> that as well and dealing with withholdings and such).

That would be a corporation.

> I know a few folks who are independent consultants, and they all seem to 
> have incorporated a business for this purpose, as well as paying an 
> accountant to help them keep their books.

Yes. That would be a corporation. Not a sole proprietorship.

> Even as an advance, it was taxable income unless it was used to cover 
> business expenses - which in my case it was.  I probably could have made 
> it much simpler by incorporating myself, but for one book that seemed 
> like overkill.

Yes.

>>> Now I'll have to find the form.   It may be that I'm just remembering
>>> the boxes saying "0" for what was owed on it.
>> 1099's don't have a "how much you owe" box on them. Just google for
>> "form 1099" and suck it down off the IRS website.
> 
> Hmm, I might be thinking of box 4, which I see is the amount withheld.

Right, which is 0 unless you're getting backup withholding.

-- 
   Darren New, San Diego CA, USA (PST)
   There's no CD like OCD, there's no CD I knoooow!

Post a reply to this message

On Thu, 02 Apr 2009 21:48:53 -0700, Darren New wrote:

> Jim Henderson wrote:
>> I know.  My point is that the tax you collect and pay on "stuff" that
>> people buy from you in the quantities you are talking about is sales
>> tax.  10,000 customer *buying* $20 of stuff from you requires that you
>> pay sales tax, not income tax.
> 
> So, if you make a living selling stuff at $20 a pop, you don't have to
> pay income tax no matter how much you'd make?

That's not what I said.  The tax paid based on the sale of stuff at $20 
each you collect sales tax for.  If some portion of that translates into 
personal income, then you have to pay personal income tax on that, 
obviously.

>>>> Does *anyone* think the tax laws make sense?  I sure don't.
>>> I'm pretty sure the owner of the local gas station pays income tax,
>>> even tho he *never* gets a 1099, yes?
>> 
>> He would pay personal income tax, sure - because his business would
>> generate an 1099 for him.
> 
> Not if it's not a corporation. You don't issue a 1099 to yourself from
> yourself.

But a local gas station has to have a business license, and in order to 
have that, doesn't it have to be registered as some sort of corporation?

>> Yes, that makes sense. But that doesn't necessarily mean the feds get
>> involved when one is created.
> 
> Not necessarily, but they do. :-) It's a federal law that allows you to
> not pay income tax on your corporation or organization. I'm not sure why
> you wouldn't think the feds are involved in at least some sense.

You seemed to be suggesting that she would have had to meet with people 
from the IRS.  The feds are involved, sure, but that doesn't mean she met 
with them in order to get the nonprofit status sorted out.

>>>>>>> Did you take them as an individual, or a corporation, or what?
>>>>>> Individual.
>>>>> Well, a corporation has to report everything, even if they don't get
>>>>> a 1099.
>>>> Yes, but we were talking about individual income tax?
>>> Yes.
>> 
>> So I'm not clear as to how we're getting them conflated.
> 
> Because an individual can't be a non-profit organization?

Well, if I was going to be facetious about it, I'd point out that there 
are plenty of people who personally don't make a profit. ;-)  But I see 
what you're saying.

>> If that's your job, then you *should* be working for a "company"
>> entity, even if it's a sole proprietorship and you're the only
>> employee.
> 
> It doesn't work that way. If you're a sole proprietor, you don't have a
> separate EIN for the business.

K, I'll take your word for that.

>> That
>> way if the business tanks, it's the business' finances that are hosed
>> and not your personal when you file for bankruptcy.
> 
> That would be a corporation.

Yes.

>> So you - as the business - are responsible (as I understand it) for
>> reporting the business' income as an entity (quarterly as I understand
>> it) and then as an individual you are responsible for reporting your
>> salary from your business (and the business is responsible for
>> reporting that as well and dealing with withholdings and such).
> 
> That would be a corporation.

Yes.

>> I know a few folks who are independent consultants, and they all seem
>> to have incorporated a business for this purpose, as well as paying an
>> accountant to help them keep their books.
> 
> Yes. That would be a corporation. Not a sole proprietorship.

Well, I was thinking the latter was a subset of the former.

It's apparently a good thing I'm not a tax consultant. ;-)

Jim

Post a reply to this message

Jim Henderson wrote:
> That's not what I said.  The tax paid based on the sale of stuff at $20 
> each you collect sales tax for.

Yes. That has nothing to do with income tax, tho, so I'm not sure why you 
bring it up.

> If some portion of that translates into 
> personal income, then you have to pay personal income tax on that, 
> obviously.

Even tho it isn't reported, right? :-)

> But a local gas station has to have a business license, and in order to 
> have that, doesn't it have to be registered as some sort of corporation?

No.  A corporation is a separate entity.  That's orthogonal to whether you 
need a license to do business.

> You seemed to be suggesting that she would have had to meet with people 
> from the IRS.  

Uh, no. I said you have to get permission from the feds. That doesn't imply 
meeting with them. It just implies that you follow the rules for them to 
approve it.

>>>>>>>> Did you take them as an individual, or a corporation, or what?
>>>>>>> Individual.
>>>>>> Well, a corporation has to report everything, even if they don't get
>>>>>> a 1099.
>>>>> Yes, but we were talking about individual income tax?
>>>> Yes.
>>> So I'm not clear as to how we're getting them conflated.
>> Because an individual can't be a non-profit organization?
> 
> Well, if I was going to be facetious about it, I'd point out that there 
> are plenty of people who personally don't make a profit. ;-)  But I see 
> what you're saying.

There are plenty of for-profit corporations that don't make a profit either. 
I'm talking about the rules. :-)

All I'm saying is, a 503(c) is (usually) in the form of a corporation, and 
certainly is a distinct entity (perhaps a partnership or a non-revocable 
trust) and not an individual.  I'm also claiming that there are moneys that 
are never reported to the IRS that you nevertheless have to pay tax on, 
whether you're a corporation or an individual sole proprietor.

>> It doesn't work that way. If you're a sole proprietor, you don't have a
>> separate EIN for the business.
> 
> K, I'll take your word for that.

If you do, it's either a partnership or a corporation. That's why it's 
called a "corporation", see, because it has a "body" separate from you.

>>> That
>>> way if the business tanks, it's the business' finances that are hosed
>>> and not your personal when you file for bankruptcy.
>> That would be a corporation.
> 
> Yes.

It's a good idea. It's just not required. :-)

> Well, I was thinking the latter was a subset of the former.

No. :-)

> It's apparently a good thing I'm not a tax consultant. ;-)

Yes. ;-)

-- 
   Darren New, San Diego CA, USA (PST)
   There's no CD like OCD, there's no CD I knoooow!

Post a reply to this message

Darren New wrote:
>> Well, I was thinking the latter was a subset of the former.
> No. :-)

To be more specific:

A sole proprietor is one person running a business as himself. So the guy 
you hire to mow your law is probably a sole proprietor. Your kid's 
babysitter is a sole proprietor. Etc.  You're using your same tax ID, and 
you're personally responsible for whatever happens - if you run over the 
neighbor's kid with the lawnmower, they'll get your house.

A partnership is when you have multiple individuals equally responsible but 
no stock as such. Each partner is responsible for all the others. This is 
usually how professionals (lawyers, doctors, etc) are required to work, so 
that people can sue the doctor himself if his doctor's office business 
amputates the wrong leg or something. E.g., lawyers aren't supposed to be 
making mistakes, so they can't incorporate to protect themselves from their 
own mistakes.

A limited partnership has two kinds of partners: general partners who run 
the business and can be sued and such, and limited partners who can't have 
any say in how the business is run, but still get some of the profits. Lots 
of times investors will set up one of these, let the nerds be the general 
partners, but take most of the resulting money.

A corporation is a separate legal entity with stocks. If the corporation 
does something wrong, you can sue the corporation but not someone who works 
for the corporation or who bought shares in the corporation. If the officers 
do something wrong corporation-wise, they can get sued (like, if they 
intentionally use the corporation to commit fraud), but for most mistakes, 
you're protected.  (To what extent depends on the state. In nevada, it's 
like 99.999% of the corporations protect the shareholders. In California, 
the courts let something close to 50% of the people suing a corporation also 
grab the money from the shareholders. Hence the prevalence of Nevada 
corporations even in other states.)

Sole proprietors pay income taxes as if they're individuals.

Partnerships pass all their money to the partners, who then have to pay the 
taxes. I.e., the partnership's money "flows through" to the individual 
partners in proportions, and then the partners report that and have to pay 
income taxes on it.

Corporations are legally speaking "people", so they pay their own income 
taxes. They're literally separate people as far as the law is concerned.

-- 
   Darren New, San Diego CA, USA (PST)
   There's no CD like OCD, there's no CD I knoooow!

Post a reply to this message

On Fri, 03 Apr 2009 10:28:50 -0700, Darren New wrote:

> Jim Henderson wrote:
>> That's not what I said.  The tax paid based on the sale of stuff at $20
>> each you collect sales tax for.
> 
> Yes. That has nothing to do with income tax, tho, so I'm not sure why
> you bring it up.

Because you were talking about tax on the proceeds from sale of 
products.  That's distinctly different from income.

>> If some portion of that translates into personal income, then you have
>> to pay personal income tax on that, obviously.
> 
> Even tho it isn't reported, right? :-)

If I sell 10,000 items for $20 each, then I'm working for a company 
that's reporting it.  As an individual, it would make more sense to 
incorporate and have the profits go to the business for reasons I already 
discussed earlier.

>> But a local gas station has to have a business license, and in order to
>> have that, doesn't it have to be registered as some sort of
>> corporation?
> 
> No.  A corporation is a separate entity.  That's orthogonal to whether
> you need a license to do business.

It was my understanding that you had to have a business entity in order 
to get a business license.  But I've never had to, so I'll take your word 
for that.

>> You seemed to be suggesting that she would have had to meet with people
>> from the IRS.
> 
> Uh, no. I said you have to get permission from the feds. That doesn't
> imply meeting with them. It just implies that you follow the rules for
> them to approve it.

K, fair enough.  When you say "involvement", I picture direct involvement.

>> Well, if I was going to be facetious about it, I'd point out that there
>> are plenty of people who personally don't make a profit. ;-)  But I see
>> what you're saying.
> 
> There are plenty of for-profit corporations that don't make a profit
> either. I'm talking about the rules. :-)

That's why I said "if I was going to be facetious about it". ;-)

> All I'm saying is, a 503(c) is (usually) in the form of a corporation,
> and certainly is a distinct entity (perhaps a partnership or a
> non-revocable trust) and not an individual.  I'm also claiming that
> there are moneys that are never reported to the IRS that you
> nevertheless have to pay tax on, whether you're a corporation or an
> individual sole proprietor.

OK.

>>> It doesn't work that way. If you're a sole proprietor, you don't have
>>> a separate EIN for the business.
>> 
>> K, I'll take your word for that.
> 
> If you do, it's either a partnership or a corporation. That's why it's
> called a "corporation", see, because it has a "body" separate from you.
> 
>>>> That
>>>> way if the business tanks, it's the business' finances that are hosed
>>>> and not your personal when you file for bankruptcy.
>>> That would be a corporation.
>> 
>> Yes.
> 
> It's a good idea. It's just not required. :-)
> 
>> Well, I was thinking the latter was a subset of the former.
> 
> No. :-)
> 
>> It's apparently a good thing I'm not a tax consultant. ;-)
> 
> Yes. ;-)

We've found common ground.  I'll stick to what I know. ;-)

Jim

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