Skip to comments.Obama the self employed President?
Posted on 04/18/2010 7:43:01 AM PDT by OldBlondBabe
President Obama just released his tax returns. Much to my surprise I discovered he filled out an IRS form Schedule C "Profit or Loss from Business" claiming a $5,661,666 business profit from the sales of his books. According to the IRS, in order to be able to file a Schedule C one must be "...involved in the activity (writing) with continuity and regularity." If you aren't, then your income goes on line 21 of your 1040 just like everyone else.
The reason for this is simple, people could write off their vacations just so long as they wrote about it and had it published. In which case they could also deduct the cost of printing the book. A tax deductible trip to Tahiti. How cool is that! Too cool for the IRS. Not only must writing be your regular activity, you must be engaged in it for the purpose of making a profit. Obama meets the profit requirement hands down, but his occupation?
Looking at what Obama put down for "Occupation" on his 1040 one finds "US President."
So which is it? Is Barrack Obama a Sole Proprietor of a business involved in the activity of writing (an author) "with continuity and regularity" or is he the President of the United States? Perhaps Obama is a part time President? There is much to be said in favor of part time Presidents. Calvin Coolidge was a great American President who went out of his way portraying himself as "hands off," spending as much time on the golf course and out of the Oval Office as possible. I don't think he even liked playing golf but it was symbolic of how unimportant he thought the Federal Government was.
(Excerpt) Read more at examiner.com ...
Should this not be “royalty income” reportable on Sch. E?
Hey, didn’t Lucky Luciano get deported for tax fraud back to Italy? Maybe we can deport Obummer similarly to Kenya!
Where’d Soros store all those books?
I’m sure IRS agents are being dispatched to Obama as we type.
Terrific Timmy Geithner told him to file the schedule C
RULES?!? WHAT rules? ..why I’m PRESIDENT, you fool!
I’m sure the President’s return was done by competent accountants, who know how such income and expenses are customarily treated.
Many technical aspects of tax accounting seem strange to someone who is not trained in the field.
“Welcome to New Kenya” (Africa USA)
“Where the law of the jungle has replaced the Law of the Land!” /sarcasm kind-of
How about that nobel peace prize money? We haven’t heard much about that or its legality either.
It all depends on how it was reported. 1099-Misc (which many who get side jobs enjoy) or on a 1098.
One can still deduct the expenses of creating the royalties on their Sch E.
Not sure why there would be a need to create a Schedule C business.
In fact, I would call it improper advice.
I would advise anyone getting $7 mill in income to create a corporation to handle the income. Any good CPA should be able to decide which is the correct corp to create.
Leaves the businessman/taxpayer too open for liability issues.
How do FReepers handle their royalty income?
Royalties from writing books go on Schedule C. And they are subject to self-employment tax.
And who told Timmy what to do? Hmmm?
Well what do expect Charlie Rangel and Tim Geitner assisted him with filing the tax return. Charlie rangel writes the tax code and does not pay it and geitner refuses to pay taxes. So it is more of the same - but watch Obama will blame Bush - it it is all George Bush’s fault. Don’t do as i do, just do as i say - words do matter. Just words, What a Imbecile!
Profiles in Courage was ghostwritten.
So, did Obama pay the self-employment tax?
Most of these sales were foreign. Hence all the overseas trips on Air Force One last year. Imagine how many he sold by going to Cairo, Istanbul and Ghana.
I doubt it. Figure that he has accountants who know where to report this kind of income.
My best guess would be that somewhere in the 500 trillion pages of output from the IRS there is a finding that authors have to report their income on Schedule C.
Maybe he filled Air Force One up with books and distributed them during his world victory tour last year.
Or maybe Soros paid for an autographed copy with one $5m check.
“Royalties from writing books go on Schedule C. And they are subject to self-employment tax.”
They MAY go on this schedule, or must? Unless Obama wrote off heaps of illegitimate expenses associated with generating these royalties, it seems to me that because of the SE tax, he ended up paying more in taxes than if he’d declared the identical royalty income and offsetting expenses on Schedule E.
But given the nature of the royalties, I can’t tell whether Obama made a choice that benefited Uncle Sam at his own expense or whether he had no choice in the matter. Given his historical pattern of charitable giving, the first possibility doesn’t seem that likely IMHO.
obama was not a constitutional law professor, although he did teach,
and john kennedy did not write profiles in courage. ted sorenson wrote
it. just a few quibbles.
Yeah, but these same “accountants” also deducted contributions to the “Congressional Black Caucus” on prior returns as charitable contributions too . . so it does make me wonder
Royalties from writing book must go on Schedule C and not on Schedule E. Royalties from land used to produce minerals such as oil and gas go on Schedule E.
I have researched this issue because I have written books on which I received royalties (such as Tax Strategies for the Self-Employed which is published by CCH Incorporated). At his salary level, he maxed out on Social Security tax. Therefore, the only self-employment tax he would pay is the Medicare tax, which has a nominal rate of 2.9 percent. He gets to deduct half of his self-employment tax in calculating his adjusted gross income.
“Tax Strategies for the Self-Employed”
Cool. I’m willing to accept you as an authority on this. :-)
I didn’t see the exact amount of royalty income, but say it was $4M. 1.45% of that is a hefty (from where I sit) $58K. I will reiterate my contention that it’s hard to picture Obama generously handing over that amount voluntarily (notwithstanding his repeatedly expressed desire to raise taxes on “the rich”). Thank you for confirming my suspicion he had no choice in the matter.
Some years ago I owned stock in an oil and gas limited partnership and IIRC I received a tax notice with instructions to put the income on Schedule E. I think Schedule E is probably for passive royalties that you get from things like owning rights to oil and gas, land, etc.
Authors get royalties in lieu of a salary for their active labor. That is why I suspect the IRS deemed it the equivalent of self-employed income.
And no AMT paid.
Obama: “Look at me I’m self-employed, I like to work at nothing all day.”
Does Campbell have a strategies page that is not on facebook?
There is no ceiling on the Medicare portion (2.9%) of the self-employment tax. There is an annual ceiling on the Social Security part of the self-employment tax (12.4%). The annual ceiling usually changes every year. You can find the current amount at http://www.ssa.gov. Good tax software programs do the calculations automatically.
I do not have a tax strategies group except on Facebook. At some point in the future, I may develop a membership Web site for providing more detailed tax advice. It would require a monthly fee.
The self-employment tax is calculated by taking the Schedule C (and any Schedule F (for farm income) net income and multiplying the total by 92.35%. The Social Security (12.4%) tax part is subject to an annual ceiling. FICA wages are included in determining the ceiling. The Medicare portion is 2.9% and not 1.45%. A taxpayer receives a deduction for half the tax. A deduction saves the taxpayer at most about 35 cents per dollar of deduction. So, if someone had $100,000 of self-employment income that is subject to the Medicare portion only because of the taxpayer’s high salary, the tax would be calculated as follows:
Good tax software programs do all of these calculations automatically.
The taxpayer would receive a deduction of $1,339.08. If the taxpayer were in the 35 percent marginal income tax bracket, the deduction would save him $468.68 ($1,339.08 x 35%). The net tax effect would be $2,209.47 ($2,678.15 - $468.68) which is an effective self-employment tax rate of 2.20947 ($2,209.47 / $100,000) percent.
Interesting. He had a large capital loss, but he got hit with the $3,000 limit of Sec. 1211. So, he has a large capital loss carryover.
“n effective self-employment tax rate of 2.20947”
Yep. I wasn’t thinking clearly: I knew the Medicare portion was 2.9% but was erroneously viewing the deduction as the equivalent of a tax credit rather than a deduction. Thanks for straightening me out.
So glad to hear our high-earning President is helping to contribute his “fair share” to the running of Leviathan... :-)
“Authors get royalties in lieu of a salary for their active labor.”
Of course, in a perfect world, Bill Ayers would have gotten a cut of the royalties reflecting his active labor in bringing “Dreams of My Fathers” into fruition. Obama’s so eager to use the tax code to shape behavior: perhaps he ought to have the tax code rewritten to penalize authors who free-ride on the unacknowledged help of ghost-writers.
Sheesh no surprise there.
Yes but not by a traitor, back then there were patriotic liberals
Ayers comes from a wealthy family. I doubt the $$ would have mattered to him.
So kudos to Mr. Obama for listening to sage advice.
The Obamas 2009 tax return was 65 pages long - more proof that our tax code is ridiculous.