If you’re in the business of creating, performing, or recording music, there are steps you can take to make the most of your year-end gear purchases and potential tax deductions. But you need to wrap these up by December 31 to be able to claim them on your tax return, so you’ll want to plan your purchases now…
Here’s a “nuts and bolts” explanation of Section 179 (first-year depreciation allowance for equipment) and how to take advantage of it. It’s important to know that the deduction limit for Section 179 increased to $1,000,000 for 2018 and beyond…
… That was the December sales pitch from one of the music gear websites I visit regularly, to see if someone has invented a new $1 million musical instrument.
Just kidding. I’m actually looking at the guitars — so many guitars! — which were of course invented hundreds of years ago (in the case of classical guitars) or else a couple of decades before I was born (in the case of electric guitars.) But I was certainly pleased to learn that I can now deduct up to $1 million from my 2018 income taxes, if I had bought an unusually expensive instrument…
The guitars that fit my budget this year are generally priced considerably less than that. But it’s great to know that the federal government has become so generous with musicians. Would that everyone were as generous…
According to the US Department of Labor, we have about 22,920 musicians and singers in America. (The ones who pay taxes, anyway.) To put that in perspective, our nation employs about 70,990 garbage men. (The ones who pay taxes, anyway.) The garbage men earn about $36,000 a year, on average. The Department of Labor does not calculate the annual earning for musicians, because we are usually out of work. (Really. I’m not making this up.)
In order to deduct the cost of a $1 million guitar, you need to earn more than $1 million playing music, to legally use the IRS deduction. This suggests a couple of problems. Considering that a musician in Pagosa Springs is lucky to earn $100 playing a four-hour gig in a local bar on a Saturday night, we quickly realize that earning $1 million per year is highly unlikely in this neck of the woods.
The other (but perhaps less pressing) problem is finding a $1 million guitar to buy. These do, in fact, exist. The most expensive guitar sold to date (according to the people who track this kind of thing) was the “Reach Out to Asia” Fender Stratocaster auctioned off in 2005 to benefit tsunami victims. This custom-built Strat had been autographed by numerous famous musicians. Mick Jagger. Paul McCartney. Jimmy Page. Eric Clapton. David Gilmour. Keith Richards. Bryan Adams. Jeff Beck. Brian May. Mark Knopfler. Pete Townshend. And a few more guys whose names I didn’t recognize, but who are presumably famous.
Auction price: $2.7 million.
Winner of the auction was Her Highness Sheihka Miyyassah Al Thani, heir to throne of Qatar.
No doubt she deducted the cost of the guitar on her Section 179. But regardless of how good she plays, Her Highness would probably not earn more than $100 a night here in Pagosa.