September 21, 2011

Minister with Other "Business" Income

Question:

A minister creates a DVD depicting his experiences as a missionary. He sells the tapes and uses all of the proceeds to make additional copies of the DVD and to have it translated into several languages. He uses none of the DVD proceeds for personal expenses.

Does he need to report the DVD proceeds and how does he treat the DVD costs?

Answer:

The minister will need to file Schedule C along with his personal tax return. The sales represent revenues and the DVD costs represent deductible expenses. Typically, a minister will retain an outside firm to duplicate the DVDs, buying in bulk in order to save money. These purchases of DVDs are subject to inventory rules that the minister's tax preparer will need to apply.

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