Does anyone know if I could start an LLC and claim the time I spend making my game as a loss so long as it doesn't violate the 3-5 rule? I'm fully prepared to document time and tangible progress to justify my write off I just was wondering if this was legal and a way to calculate how much I would write off. I already own a license of Visual Studio and the XNA framework is free so there are no material costs to speak of. I plan on seeking other work in the name of the LLC to make it profitible but in the mean time is this possible?


Thanks.

If you live in the United States, you can ask this kind of question at your local SBA office. Free and great services available from the Small Business Administration. In your area! sba.gov

I do believe that production time you spend to produce a "product" for you company is fine and that you can and most likely will have a great amount of loss in your capital, which in return will not be subject to income tax. However you'll still need to pay salaries and the taxes that come with them, plus negative result should also be reported by filling the appropriate forms.

Basically its your own right to operate a company the way you want it as long as it does not violate the law.

Note that my answer is not based on high knowledge of US laws and should not be taken as a correct advice. You should contact your local SBA office and have details with them as Tom suggested above.

Anyways why do you need an LLC and DO YOU really need one?

justify my write off [/quote]

I'm just curious, but what exactly are you planning to write this off of? Even if you could take a deduction for your work (which sounds pretty dubious), you would only be able to deduct it from the taxes owed by your LLC. Is your fake corporation somehow generating profit?

If you live in the United States, you can ask this kind of question at your local SBA office. Free and great services available from the Small Business Administration. In your area! sba.gov

For whatever reason I totally did not think of the SBA. Thanks!

Anyways why do you need an LLC and DO YOU really need one?

To protect personal assets from business activities, of course. I don't see why anyone wanting their own business, in these days with lawsuits of all kinds going around, would not form it under some sort of limited liability entity. Especially with the patent lawsuits going around you don't even have to "do" anything illegal per se. All someone has to do is have a patent and point at you and say "hey! I thought of this first!" even though you stole nothing from them, never tried to do anything to them and very well could have entirely generated, worked through and implemented the idea on your own and you suddenly have a lawsuit on your hands. I have a family as well and their protection comes first.

I'm just curious, but what exactly are you planning to write this off of? Even if you could take a deduction for your work (which sounds pretty dubious), you would only be able to deduct it from the taxes owed by your LLC. Is your fake corporation somehow generating profit?

I'm wondering if I can write off the work done and yes, of course, I'm trying to generate a profit. That's the point of a business. I would do this by picking up side projects, or at least attempting to, for the business itself. I'm not trying to gip the government. If I were I would just try to write off all my "salary" derived from nothing except some imaginative figure I'd "pay" myself. Instead, I'm writing here and am currently trying to set up a meeting with a local tax attorney. The last thing I want is the feds knocking on my door wanting to see where I lost $50k in a year for a one man operation.

Is your fake corporation somehow generating profit?

LOL

LOL

I was amused. Though it escapes me how I can register my business with the state I'm in and it somehow be fake.

I was amused. Though it escapes me how I can register my business with the state I'm in and it somehow be fake.

Actually, I feel like a video game production company would be a pretty good candidate for a shell corporation for money laundering and other illegal ventures. (Side note: This is based mostly off of episodes of Law and Order, plus a little bit of Weeds and Breaking Bad). A high capital business with a relatively low chance of showing any decent return, let alone profit... But history has suggested that I would make a pretty bad criminal, so my feelings on this probably shouldn't be very convincing.