That spreadsheet approach sounds really helpful! Do you have any template or example you could share? Also, does your spreadsheet account for the half-year convention that applies in the first year for most MACRS assets?

I don't have a shareable template, but I can describe how I set it up. I created columns for: Asset Description, Date Acquired, Cost Basis, Recovery Period, and then a row for each year of depreciation showing the percentage and calculated amount. Yes, my spreadsheet definitely accounts for the half-year convention! That's one of the most important aspects of MACRS. For 7-year property, I use the standard MACRS percentages: 14.29% in year 1 (reflecting half-year convention), 24.49% in year 2, 17.49% in year 3, and so on. The spreadsheet automatically applies these percentages to the basis amount.

This is only partially correct. The 50% rule doesn't automatically force you to use ADS. It limits your Section 179 expensing, but you can still use regular MACRS for depreciation. The actual rule is that if business use drops BELOW 50%, then you must switch to ADS.

Is it true that if your LLC makes less than $400 in a year, you don't have to pay self-employment tax? I heard that somewhere but not sure if it's accurate.

Yes, that's correct. If your net earnings from self-employment are less than $400 for the year, you don't have to pay self-employment tax. However, you still need to report the income on your tax return regardless of the amount. Be aware that even if you don't owe self-employment tax, you might still need to file other forms related to your business activities depending on your situation. And some states do have minimum tax requirements for LLCs regardless of income, so always check your specific state rules.

Is there an app you recommend for tracking business miles? I always forget to log them and probably missing out on deductions.

Thanks for the advice! This is exactly what I'm worried about. Did you use any specific method to organize everything? And did you need to get anything professionally appraised like your car or home?

I created a spreadsheet with two columns: assets and liabilities, dated exactly when the debt was forgiven. For assets, I included bank account balances, investment accounts, retirement accounts (though some are protected), car value (used Kelley Blue Book for the specific date), home equity (if you own), and even things like valuable jewelry or collections. For professional appraisals, I didn't need them. The IRS accepted Kelley Blue Book for my car value, and for my home, I used the county tax assessment plus comparable sales in my neighborhood. The key is being reasonable and having documentation to back up your numbers. I also took screenshots of all my debt balances on that date - credit cards, loans, medical bills, etc. Just make sure you can show that your total debts exceeded your total assets at the time of forgiveness.

I used TurboTax Premier last year for this exact situation. The basic version doesn't handle Form 982 well. Even with Premier, I found the guidance for the insolvency worksheet pretty confusing and ended up having to do most calculations manually. H&R Block Deluxe and above should also work, but be prepared to input a lot of info either way.

What about things like beauty treatments, fitness expenses, etc for adult content creators? Are those considered legitimate business expenses? My friend says she deducts her hair salon visits but that seems risky.

For beauty treatments, fitness expenses, etc., it really depends on whether they're "ordinary and necessary" for your business. This is somewhat of a gray area and varies by individual circumstances. Hair styling specifically for photo/video shoots can often qualify, but regular maintenance haircuts typically don't. The key is whether these expenses are directly tied to your business rather than personal care. For example, if you're marketing yourself as a fitness model and your workouts are specifically to maintain that brand image, you might have a case for deducting some gym expenses. However, you should maintain very good documentation and consider consulting with a tax professional who specializes in entertainment/performance professions, as these deductions can be audit triggers if not properly substantiated.

I was audited last year after 3 years of content creation. The key was having detailed records of EVERYTHING - all income, all expenses with receipts, dates, descriptions. I used a separate bank account and credit card for all business transactions which helped tremendously. The IRS didn't care about the nature of my work AT ALL. They just wanted to verify my income reporting and expense documentation. Having a mileage log for travel to shoots and a dedicated space for my home office deduction was super important. The audit was stressful but I came through fine because my documentation was solid.

Thanks for sharing your experience! Do you separate out different types of expenses (like initial purchase vs. ongoing care) or just lump everything together under educational supplies?

We actually do separate the expenses into different categories. The initial purchase of the animal goes under "Equipment" since it's like acquiring a new business asset. Ongoing expenses like food, bedding, and regular checkups go under "Educational Supplies" since they're consumable items related to our curriculum. For larger vet expenses like that emergency surgery, we categorize it under "Repairs and Maintenance" - similar to how you'd categorize fixing a broken piece of classroom equipment. Our accountant said this approach gives us cleaner books and is easier to defend in case of an audit.

That's actually a really good point. The IRS considers animals to be property, so more expensive animals might need to be capitalized. What threshold did your accountant use for deciding to depreciate vs. expense?