SAG-AFTRA and the Crile Decision

The recent United States Tax Court decision Susan Crile v. Commissioner of Internal Revenue has seemed to buoy the spirits of artists everywhere. Those in performing arts fields are wondering how this decision may or may not affect them. Those of us at SAG-AFTRA are assessing how our members fit the court’s criteria.

Susan Crile is an artist and tenured professor of studio art at Hunter College in New York City. The IRS accused Crile of underpaying her taxes. The IRS argued that Crile’s decades-long career as a visual artist was a “hobby” and supplementary to her career as an academic. The main issue was whether Crile’s work as an artist was “an activity not engaged in for profit,” and therefore certain losses she claimed on her tax returns were disallowed.

The court reviewed nine factors set forth by Internal Revenue regulations [Sec. 1-183-2(b)] to determine whether a taxpayer conducts an activity with the intent to earn a profit. After examining each factor, Judge Albert G. Lauber ruled that Crile had “met her burden of proving that in carrying on her activity as an artist, she had an actual and honest objective of making a profit.” It is of note that the court stated that no one factor or group of factors is controlling, nor is it necessary for all factors to be present. Rather, the court will apply the factors to each individual factual situation as necessary.

So, what, you may ask, does this have to do with SAG-AFTRA members? Does the work of a fine artist compare to what performing artists do? The answers may not be easy to determine, but the questions are fairly obvious. How do you fit into these tests? Could you convince a disinterested party that you were pursuing your professional goals as earnestly as Crile? What kind of books and records do you have? How do you maintain your professional contacts? Your job searches? What kind of work history do you have in the business? For every answer you may have, you’ll discover more questions. 

If Crile v. Commissioner of Internal Revenue teaches us anything, it’s that the life of an artist may ask us to question — and sometimes prove — our motives and intentions and, generally, to demand of us more perseverance and good recordkeeping than is required of other taxpayers.

For help with your audit, advice on recordkeeping, and yes, proving a profit motive, contact us at the VITA office at (212) 921-2548.

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This article was originally featured in the December 2014 local e-newsletter.