What about if you have limited space? I'm in a small apartment and can't really have "separate" areas - I'll be using the same corner for filming AND my personal workouts. Does that make the deduction impossible?

Having limited space doesn't make deductions impossible, but you'll need to be more careful with documentation. Track usage hours meticulously - note when you're using equipment for business (creating content, client demos) versus personal use. Take photos of your "business setup" with lighting, camera position, etc., then photos of normal personal use. You'll likely need to calculate a percentage based on hours of business use vs. total use. For example, if you use the equipment 10 hours weekly with 7 hours for business purposes, you could reasonably claim 70% business use. Just be honest and have documentation to back up whatever percentage you claim.

This is terrible advice. "Let your tax person figure it out" only works if you've properly documented everything throughout the year. No tax preparer can magically make deductions legitimate if you haven't kept proper records.

Thanks for the suggestion! I hadn't thought about local incentives. Did you find these through a specific website or resource? I'm wondering if there's a centralized place to check for TN-specific programs rather than calling around.

I found most of the local programs through my state's housing finance agency website. For Tennessee, try checking the Tennessee Housing Development Agency (THDA) website - they typically list all state and local homebuyer assistance programs. The other resource that was super helpful was actually my county's property tax assessor's office. I just called and asked if there were any programs for new homeowners, and they emailed me a list of everything available. Local credit unions sometimes have good information about these programs too, even if you didn't finance through them.

Do you include regular home maintenance in that spreadsheet? I've heard conflicting things about whether things like a new water heater or roof repairs have any tax implications.

Doesn't the IRS consider this tax evasion? I heard they've been auditing cannabis companies and looking specifically for these kinds of arrangements.

It's not tax evasion if structured properly with legitimate business purposes for each entity, appropriate transfer pricing, and proper documentation. The key is that each business must be a genuine operation with real commercial purpose beyond just tax savings. What the IRS looks for is sham arrangements where the separation is only on paper. You need separate books, bank accounts, operations, employees, etc. It's complex and definitely requires specialized cannabis tax and legal advisors to set up correctly. There have indeed been audits targeting improper versions of this strategy.

It's not just rumors at this point - the DEA formally proposed rescheduling to Schedule III in May. That's significant progress. But you're right to be cautious about timeline expectations. The regulatory process isn't quick. Smart to focus on what you can control with COGS optimization in the meantime.

Does your spreadsheet also track when you have new capital gains that offset some of the carried loss? That's what's confusing me - I had a $18K carryover loss but then made $5K in gains this year, so I'm not sure how to calculate what's left.

Great question! Yes, my spreadsheet has an additional column for current year gains/losses. If you have a $18K carryover and then make $5K in gains, those gains are first offset by your carryover loss. So your $18K would be reduced by the $5K in gains, leaving $13K. From that $13K, you can then deduct up to $3K against ordinary income this year, leaving $10K to carry forward to next year. The key thing to remember is that current year gains get offset first before you apply the $3K against ordinary income. This is exactly why having your own tracking system is so helpful - tax software sometimes doesn't clearly show how this calculation was done.

Which tax software do you recommend for handling capital loss carryovers? I've been using H&R Block but I'm not confident it's tracking my carryover correctly.

Does the liability insurance actually protect your personal assets though? I was told insurance has coverage limits and exclusions, while a limited company provides a more complete separation between business and personal assets?

That's a fair question. The insurance does have limits and some exclusions (like if I was found to be grossly negligent or committed fraud). A limited company gives more comprehensive separation between personal and business assets. For me, it came down to a risk assessment. With the procedures I do, the worst-case realistic claim would likely be covered by my insurance limits. But if you're doing more invasive procedures with higher risk, the limited company route might give you better peace of mind. It's definitely a personal decision based on your specific risk profile.

I did this last year. Yes, there's a process called "striking off" your limited company, and any assets left in the company (including cash) are treated as capital distributions to shareholders. If you have significant retained earnings in the company, there could be a tax hit when closing down. In my case, I had about £35,000 in the company and ended up paying around £6,300 in taxes to extract it all when closing down. If you're considering switching, it might be worth planning ahead and gradually extracting money from the company in the most tax-efficient way before closing it down.

Thanks for sharing your experience. That's really helpful information! The tax hit on extraction does sound significant. Did you notice any other unexpected challenges when switching? And have you found the sole trader structure to be better for your situation overall?