[TheForge] opinions of tax status

[Dave Brown]

At 10:50 12/26/02 -0600, you wrote:
>Another question on this same line........
>     When we make an item, that  has $XXX.XX of steel in it, plus forge time,
>coal and such, plus what ever other expendables were required to manufacture
>it, plus labor.  And then we sell it to the customer for $XXXX.XX, how do you
>determine the actual profit on the item for income tax purposes?
>
>Thanks,
>Larry

Larry,

The difference between cost of materials, coal and such and the selling 
price and the selling price is your taxable profit in the case 
outlined.  That is unless the "forge time" is for someone else that you are 
paying a reportable wage to.  If you are the "forge time" then the total 
difference is considered as paid/earned by you and therefore taxable, 
income tax that is.  Sales tax, as some others have mentioned, is a 
different ball game altogether.  In that case the sales tax is applicable 
to the whole price that you charged the customer.

Dave Brown
Accountant/Auditor

Some number of years ago I gave up a livelihood,
In it's place I found a life.