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Are self-employed actress's debts business debts
Alik:
I don't necessarily have any authority to back this up, but...I think the first focus is on the debt itself. The fact that the debtor's tax returns don't show a schedule C evidencing business income and deductions is not dispositve of whether the debt is incurred "primarily for a personal, household or family purpose" which is the statutory standard for whether a debt is "consumer" debt. When Micheal Hauser of the OC OUST was at one of our seminars last year, he pointed out that if the petition is silent on the issue of business dealings, meaning there is no mention of the business nature of the debt in the description is schedule F, no answers to the SFA # 18-25,
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This actress has an MBA and is currently a high earner as an executive for a
studio. So she fails the means test, if required to take it. Fortunately,
her debts are mostly business debts, debts of a self-employed actress.
There are several problems though.
First, actors frequently receive w2 income even though the nature of their
work is more like that of an independent professional or independent
businessperson who seeks out multiple short-term jobs. So 1040 schedule C
has no income, but w2 income is listed elsewhere on the tax return. Does
this make it likely that debts are characterized as job search debts rather
than business debts?
Second, paid work is scarce and earnings are low. That is just the nature
of the business.
Third, a great deal of money went for dressing like a starlet and going to
places where starlets go to meet Hollywood executives--Holywood parties and
watering holes.
Do the second and third items above make it likely that the debts are
characterized as hobby debts rather than business debts?
Alik Segal
Alik.Segal@gmail.com
310-362-6157
Cal. CD, Los Angeles
This actress has an MBA and is currently a high earner as an executive for a studio. So she fails the means test, if required to take it. Fortunately, her debts are mostly business debts, debts of a self-employed actress. There are several problems though.
First, actors frequently receive w2 income even though the nature of their work is more like that of an independent professional or independent businessperson who seeks out multiple short-term jobs. So 1040 schedule C has no income, but w2 income is listed elsewhere on the tax return. Does this make it likely that debts are characterized as job search debts rather than business debts?
Second, paid work is scarce and earnings are low. That is just the nature of the business. Third, a great deal of money went for dressing like a starlet and going to places where starlets go to meet Hollywood executives--Holywood parties and watering holes.
Do the second and third items above make it likely that the debts are characterized as hobby debts rather than business debts?-- Alik SegalAlik.Segal@gmail.com
310-362-6157Cal. CD, Los Angeles
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