Hi all,

I'm curious. I have heard these glorious rumors that companies such as Microsoft write off software piracy on their taxes. I.E. if they discover that 20,000 copies of Windows XP have been pirated, they will literally write off $200 x 20,000 on their taxes as lost merchandise.

I know that regular stores can do this for stolen goods, but can software people do it?

I have no idea how you'd be able to audit that.

Hey, I'm going to claim 20k pirated copies of BLOX x $14.99 each = $300k. The gov's going to owe me some money. Bout time I get something back from the system :D

I'd suspect that such a gimmick could easily trigger an audit and lot's of headache. I'm not a tax expert but technically you only write off against real revenues and not fairy land revenues. Would not suggest this. Could be the 20k copies was related to stock shrinkage as on one tax year they report any inventory as an asset and pay taxes on that then any shrinkage next year could be a deduction or something like. But given microsoft's huge investment in accountants and attorneys guess anything could be possible.

Given that we aren't exactly sure how to defend such a deduction, it'd probably be wisest not to try it ;)

Well, thinking back to my finance and accounting classes:

There is an old addage.... call a tax consultant before you do ANYTHING related to your taxes, because tax laws are the most complicated and convuluted system in the universe.

So, thats my advice... but if I remember correctly it IS possible to write off a % of your income for this without ever triggering any flags.

Since I work from home like many of you, everything I do is a business related expense, from eating my waffles in the morning to buying the latest video game (market research of course). It is all written off, I am yet to have any part of my income exceed my writeoffs... (Not that i make so much money, lol)

My point: If you dont have a tax guy already, get one. Odds are the amount they save you will exceed the amount they cost AND you dont have to deal with the headache of taxes.

Joseph Lieberman

I have been trying to figure out the tax situation and you can really write off that much? Food, etc.?

Interesting...

Alex

Originally posted by Raptisoft
Hi all,

I'm curious. I have heard these glorious rumors that companies such as Microsoft write off software piracy on their taxes. I.E. if they discover that 20,000 copies of Windows XP have been pirated, they will literally write off $200 x 20,000 on their taxes as lost merchandise.

I know that regular stores can do this for stolen goods, but can software people do it?

Its a myth spread by software pirates to make themselves feel better. The IRS only allows deduction for actual costs, not theoretical ones.

Too bad its a myth though, it would be nice to be able to donate a couple thousand licenses to charity every year and pay no taxes at all!

Everything you do is a business expense. The way it works is its like a road. You have a road with two lines on each side, each thing has a percent associated with it by the government. Say 45% of your food expenses can be used as a writeoff, or 90% of your comptuer expenses, or 10% of your movie rental expenses.

Thats the way business from home works... each given item has a percent, and to find out all these percents you had better hire someone, because its not worth your time.

IF you can prove that things are being stolen from you it is a tax writeoff, I am pretty sure, but you will be hard pressed to get a number. Still, there may be a deduction allowance for it (IE: you can assume 5% of your sales revenue will be tax deductable for the purpose of taxwriteoff without causing an audit.)

Whatever it is, I believe it does exist, talk to a tax guy and let me know :-)

Joseph Lieberman