Although you may not be making a profit, the issue is strictly about costs and time relating to your training or business related issues. Many, many years ago, I joined a program similar to Amway. I never expected to make money on my "investment," what I was doing was purchasing a product that I would have paid significantly more for (retail), I joined the business only to get the products at 50% off. The person who signed me up told me that I would be able to write off any trip I went on as long as I mentioned the product to someone. Sounded great, my investment (about $200), purchase the products at 50% off "sticker price," and free vacations - all would be for business, I would mention the product to somebody.
What a deal...I will make the investment price back in no time...and I get a box of cool products for my investment...AND I could write off the cost of the samples.
Sounded great...how can I go wrong?
I learned only after reading IRS documents, that
-I could not write off the price of the start-up box, as in converted to my use (in fact it is arguable that I made a profit on the box)
- My business trips required that I could document how I spent the time on my new business. It is much more than dropping a business card into a fish bowl. I could write it off is I spent 8-hours a day working.
- I was told that a room that I had my computer in was deductible as an office...however, I also had a television, surround sound, etc. and our family used that room as our "family room," another tax deduction taken away.
IN years thereafter, I did have a room that was used solely for my workplace. I was living in Washington State, my home office was in VA. Most of the time, I was traveling for work, so my office was seldom really used, however, it was for my office only. Whenever I was at home and worked, I had a room that was my office, and totally deductible. So was the percentage of electricity used, etc. (As I traveled so much the room would have required a log, indicating my actual use of this room that was only used for my work,) After reading all of the requirements, I likely would have deducted everything...I chose not to do so. The deduction was not that great, and the documentation was a nightmare to keep up with.
