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tax questions- very long an

updated sun 14 feb 99


Marcia Kindlmann on thu 11 feb 99

Subject: Tax questions- very long answer

Greetings all,

I'm grateful for Bonnie Hellman's post about taxes & inventory costing, for
this is the kind of figuring that we really need to do to know how much it
costs to make our pots. Yeh, it is tedious, non-creative, but once a
structure is figured out it's not so hard to do. In some local craft fairs it
would be salutary if everyone had been interested in thinking this through. I
suspect that somebody who's selling mugs in CT for $6 (retail) or saying
they're just trying to pay for their clay has not been doing this kind of

I've been figuring my kiln-firing costs (as well as clay & glaze materials)
into the cost of making pots (inventory valuation) so that I know how much to
charge and still be able to make a profit, if I do some wholesale sales, and
to answer the question of whether consignment at 60/40 makes sense.(generally
not). (Here I'm talking domestic ware, humbly priced, not one-of-a-kind art
gallery pieces.)

By the way, how does one figure the cost of glaze materials in a pot, or what
the value of glaze materials in inventory is. (Being obsessed with
conscientiousness and professionalism when I started in this 20 years ago I
didn't want to adopt the "what, me inventory? there's nothing in my studio at
the end of the year..." idea that another potter offered.) Trying to figure
out what a pot really cost proved useful and salutary in the end, for me. OK,
how did I figure this thing, cost-of-glaze on a pot.

There were several pots where I'd changed my mind and wished I'd glazed that
pot with something else. The pot was bisque, not yet fired. I scraped the
glaze off, inside & out (for a bowl, not difficult) & weighed it -- weighed
the dry glaze. Then when that pot was later glazed, fired, & weighed, I found
that, very consistently, there had been 2 oz. of dry glaze for every lb. of
weight in a glaze-fired pot.

That provided the basis for computing the cost of glaze used on a pot. I
looked over my glaze recipes & computed the cost per ounce --for typical
(average-cost) glazes. This is done in terms of dry raw material, since
that's how these materials are priced when we buy them. Saves all kinds of
muttering over glaze buckets at the end of the year wondering how much is in
the bucket and how much is still in the bag. (if one is inventorying glaze
materials). Knowing how much glaze material was used up in a year is then
simply a matter of weighing the pots in kilnloads after glaze-firing (some of
us do that anyway) and multiplying a cost-per-lb figure for the glaze used.

This dizzying figuring was helpful to me in learning some other things too --
like how much more it costs to use tin in a glaze instead of zircopax. Not
much. It's well worth it, (easily incorporated into price) if the tin gives a
glaze that desired buttery warmth.

Marcia in CT

Lee Jaffe on sat 13 feb 99

The critical question is "Would you ask a tax accountant for
pottery advice?" What others do may be a helpful indicator,
but in the long run you want something you can take to the
audit. -- Lee Jaff