It’s that time again…
A rational man would simply give up writing books about now. Royalties are delt with extremely unfairly at tax time…the short of it is…expenses can only be deducted against earnings and only in the year incurred/earned.
This means that if I spend money in 2004 researching and writing a book…and it didn’t publish until 2005, then I can’t deduct the expenses and end up paying full taxes on the earnings. Bummer. Oh, and it’s really not quite that simple…you can do what amounts to income averaging…but you MUST turn a profit inside three years or you are declared to have “no motive for profit” and can’t deduct ANY expenses (while paying full income taxes on the proceeds).
Ah, well. If I could just sell a couple million of the darn things I wouldn’t have to worry about it!