gary's question - tax

Gary:

I've never seen a case where new first-time schedule C's
cause the headaches you are predicting. They are
also a simple profit-loss, and do not need outside
assistance in many cases.

You are also free to report the income as a hobby. The deductions
will, in that case, be limited to schedule A, but this will
certainly make the exercise easier. In my experience, most musicians
have other 'Schedule C' items, so the CD per se simply drops
into the existing form for that year.

The bigger problem, honestly, is on the state level! Suddenly
one has stock-in-trade, inventory, COGS, excise taxes, and,
shudder - the ultra-big vampire of Sales Taxes.

Many of these aren't an issue for you there in Texas, but
the Sales Tax thing is and it argues for some informed advice.

As for returning the money for bought CD's - its a novel idea but
remember that most individual taxpayers are cash basis - income
is recognized in the year received.

Rick Sanford
Manhattan