The IRS has released a new Audit Technique Guide (ATG) designed to provide assistance in auditing individuals in various roles in the entertainment industry. The auditor must develop issues in relation to the taxpayer’s trade or business. To that end, it may be necessary to look beyond the job title and determine the actual duties and responsibilities of the taxpayer.
The ATG provides an overview and examination of the music industry, looks at videos, songwriters, publishers and live performers and considers the interests and characteristics of producers and managers. The ATG covers general background, income, capitalization and cost recovery, passive activity losses, travel and transportation, recordkeeping and personal expenses. It also examines other issues, such as home office use, nonprofit activities, job searches, agents, and moving expenses. The scope of this guide also includes employment tax, unions and guilds, reimbursements and copyright law.