Luthier Tax Deductions: 2026 Schedule C Guide to Tonewood, Trade-Ins & Build-vs-Repair Materials

Published: September 22, 2026 · Reading time: 11 min

TL;DR: A self-employed luthier runs two businesses under one roof — a materials-heavy build shop and a labor-heavy repair bench — and the return has to keep them separate. The CNC fret slotter, thickness sander, and spray booth go under Section 179 on Line 13; tonewood and hardware for a custom build are Cost of Goods Sold in Part III, while fret wire, glue, and setup incidentals are Line 22 supplies. A traded-in instrument taken as partial payment must be added to gross receipts at fair market value under Treas. Reg. §1.61-2(d)(1) — not just the cash you actually collected. The shop van is Line 9 at $0.725/mile (Jan 1–Jun 30) and $0.76/mile (Jul 1–Dec 31) — 2026's rate changed mid-year; a detached workshop qualifies on Line 30 under §280A(c)(1)(C); bailee coverage for customer instruments sitting in your shop is Line 15. Lutherie isn't an SSTB, so the QBI phase-out doesn't apply — the worked example below still checks all three §199A limits, and the taxable-income cap trims the naive figure by $3,220.00.

Most trade guides can treat "materials" as one line. Lutherie can't, because the same shop runs two different businesses depending on what's on the bench that day. A custom build consumes real inventory — a set of Sitka spruce and East Indian rosewood, tuning machines, a bone nut and saddle — and belongs in Cost of Goods Sold. A repair or setup is mostly labor with a few dollars of fret wire and glue attached, and belongs on Line 22. Add a trade where customers routinely hand over an old instrument as partial payment for a new one, tonewood that sometimes crosses a border and triggers a federal wildlife-trade declaration, and a workshop that needs to be loud, dusty, and ventilated enough for lacquer — and the luthier's Schedule C has a shape genuinely its own. Here's every write-off mapped to the right line for 2026, plus a full §199A worked example.

The Shop Equipment — Line 13 (Section 179 & De Minimis)

Section 179 — the year-one route

Anything with a multi-year life can usually be expensed 100% in year one under Section 179 on Line 13, as long as business use stays above 50%:

• A CNC fret-slotting machine or a thickness sander, the two purchases that separate a hobby bench from a production shop
• A spray booth and its exhaust/filtration system, needed for lacquer or catalyzed finishes
• A workbench, bending iron, go-bar deck, and clamping fixtures with real service life
• A humidity-controlled wood storage cabinet — tonewood that isn't stored at a stable relative humidity cracks, and the cabinet that prevents that is a depreciable asset, not a supply
• A boom microphone or basic recording setup, if you record demo clips for custom-order marketing

The 2026 aggregate Section 179 limit is $2,560,000 (Rev. Proc. 2025-32, §4.24) — nowhere close to what a one-person shop spends, so the limit itself is never the binding constraint here. Section 179 versus bonus depreciation is the choice actually worth thinking through.

None of this equipment is listed property. §280F(d)(4)(A) reaches passenger automobiles, other transportation property, and "any property of a type generally used for purposes of entertainment, recreation, or amusement." A thickness sander is none of the three — and neither, for that matter, are the finished instruments sitting in inventory waiting to sell, since listed-property rules only ever apply to depreciable property, and inventory isn't depreciated at all.

De minimis safe harbor — the everyday gear

Items costing $2,500 or less per invoice can skip depreciation with the de minimis safe harbor election and go straight to supplies on Line 22. That $2,500 figure comes from Notice 2015-82, which raised the regulatory default of $500 for a taxpayer without an applicable financial statement. Files, scrapers, fret-dressing stones, small hand planes, a digital caliper — receipt in, deduction done.

Materials: Build vs. Repair, and the Trade-In Wrinkle

This is the section that gives lutherie a shape of its own, because the same supplier invoice can end up in three different places depending on the job.

1. Goods that end up in a specific custom instrument → Cost of Goods Sold, Part III. Tonewood — top, back, sides, neck blank — bracing stock, purfling and binding, finish materials used on a build, tuning machines, bridge, nut and saddle blanks, and strings installed on a new instrument at delivery. These are identifiable with one piece and deducted against that piece's sale price, not in the year you bought the wood. See COGS vs. supplies on Schedule C for the mechanics.

2. Consumables used across many jobs → Line 22 supplies. Fret wire and crowning/leveling supplies for a repair, glue, a replacement nut or saddle blank sold as a repair item, strings for a customer's own instrument, sandpaper, polish, and touch-up finish. Nobody's tracking which repair consumed which drop of glue, and nobody needs to.

3. A traded-in instrument → income at fair market value, then inventory. A customer who wants a new custom build often hands over an old instrument as partial payment. That trade-in is not a discount and it does not reduce your reportable revenue — it's compensation paid in property, and Treas. Reg. §1.61-2(d)(1) requires you to include its fair market value in gross income exactly as if it had been cash, with the stipulated deal price "presumed to be the fair market value... in the absence of evidence to the contrary." Your basis in the traded-in instrument is that same figure. When you resell it, the sale price is new gross receipts and your basis is the Cost of Goods Sold offsetting it — only the spread between the two is additional profit.

What a trade-in actually does to the return

A customer trades a used steel-string acoustic as partial payment for a $4,200 custom build, and the traded instrument sells later in the year for $900.

node -e "
// Trade-in mechanic under Treas. Reg. Sec. 1.61-2(d)(1)
const buildTotalPrice = 4200;
const tradeInFMV = 650; // stipulated credit, presumed to be FMV absent contrary evidence
const buildCashPortion = buildTotalPrice - tradeInFMV;

const tradeInResalePrice = 900; // traded guitar resold later in the same year
const tradeInResaleGain = tradeInResalePrice - tradeInFMV; // COGS = FMV basis at receipt

const fmt = n => n.toLocaleString('en-US', {minimumFractionDigits:2, maximumFractionDigits:2});

console.log('cash actually collected on the build', fmt(buildCashPortion));
console.log('trade-in FMV added to gross receipts', fmt(tradeInFMV));
console.log('total gross receipts reported on this build', fmt(buildCashPortion + tradeInFMV));
console.log('resale price of traded guitar', fmt(tradeInResalePrice));
console.log('COGS on resale (= FMV basis)', fmt(tradeInFMV));
console.log('additional profit from the resale', fmt(tradeInResaleGain));
"

Output:

cash actually collected on the build 3,550.00
trade-in FMV added to gross receipts 650.00
total gross receipts reported on this build 4,200.00
resale price of traded guitar 900.00
COGS on resale (= FMV basis) 650.00
additional profit from the resale 250.00

Only $3,550.00 actually hit the bank account on the build, but $4,200.00 belongs on Schedule C — the missing $650.00 is the trade-in, reported at the price you and the customer agreed to. Reselling the traded guitar later adds another $900.00 to gross receipts and $650.00 to Cost of Goods Sold, for $250.00 of new profit. Skip the $650.00 income inclusion because no cash changed hands, and gross receipts understate what actually happened on the job — an inconsistency a reviewer can catch just by comparing the invoice to the return.

Tonewood sourcing: the Lacey Act declaration

Some tonewoods — rosewood species (genus Dalbergia) in particular, several of which sit on CITES Appendix I or II — are protected under international and federal wildlife-trade law. The Lacey Act, 16 U.S.C. §3372(f)(1), makes it unlawful to import certain plant products, including many woods, without filing an import declaration that states the scientific name, the value and quantity of the shipment, and the country of origin. This isn't a tax provision — it's a customs and wildlife-trafficking compliance requirement — but it touches the return in one direct way: customs broker fees and declaration-filing costs on imported tonewood are an ordinary deductible business expense, typically Line 23 or Line 27a. The wood itself is still simply Cost of Goods Sold, same as any other tonewood purchase. Buy from a domestic supplier who has already handled the import declaration and the compliance question disappears from your own return entirely; it only becomes your problem if you import the wood yourself.

Do you need formal inventory?

Probably not. Under IRC §471(c), a small-business taxpayer — average annual gross receipts for the prior three years at or below the §448(c) threshold, which is $32,000,000 for 2026 (Rev. Proc. 2025-32, §4.30) — can treat inventory as non-incidental materials and supplies rather than running a formal year-end count. Every one-person shop clears that threshold by a wide margin. What §471(c) simplifies is how you arrive at the COGS figure; it doesn't turn a set of tonewood still sitting on the shelf at December 31 into a current-year deduction. See Schedule C lines 33–34 and inventory valuation for the method election.

The Van — Line 9

House calls, instrument delivery, wood-supplier runs, and the occasional shop swap all put miles on a vehicle. Two methods on Line 9:

• Standard mileage rate: 2026 has two rates, because the IRS revised the rate mid-year. $0.725/mile applies January 1 through June 30, and $0.76/mile applies July 1 through December 31. A full-year mileage log has to be split at the July 1 boundary and each half multiplied by its own rate — a single annual figure understates every mile driven after the increase.
• Actual expenses: fuel, insurance, repairs, tires, and depreciation × business-use percentage.

You must elect the standard mileage rate in the vehicle's first year of business use if you want the option of using it later. Either method requires a contemporaneous mileage log — date, miles, destination, business purpose — and the commuting rule still applies unless your home workshop is your principal place of business. Tolls and parking stack on top of either method.

The Workshop Itself — Line 30

A lutherie shop is usually a converted garage, a backyard shed, or a purpose-built shop room, because the work is loud, dusty, and needs finish ventilation the rest of the house shouldn't have to tolerate. That physical fact lands you in the easiest of §280A(c)(1)'s three doors. Subparagraph (C) allows the deduction for "a separate structure which is not attached to the dwelling unit, in connection with the taxpayer's trade or business" — it does not require the workshop to be your principal place of business, and it does not require customers to meet you there, which matters if most of your business arrives by drop-off, shipping, or local house calls rather than in-shop consultations. The opening words of §280A(c)(1) still govern all three subparagraphs: the space has to be "exclusively used on a regular basis" for the business. Park the family car in the workshop bay or store the holiday decorations on the shelving and it fails.

Where the simplified method actually helps this time

Rev. Proc. 2013-13 §4.01 sets the safe harbor at "the portion of a home used in a qualified business use of the home, but not to exceed 300 square feet," at "$5.00" per square foot — a $1,500 annual ceiling. Unlike a trade that needs floor space to turn a sofa or park a full-size vehicle, a lutherie workshop can genuinely fit under 300 square feet — a bench, a spray booth, wood storage, and a CNC station don't need the footprint a furniture shop does. When the workshop is under the cap, the simplified method captures every square foot, and it's worth comparing to the Form 8829 actual-expense method rather than assuming the more complicated method automatically wins. See the simplified vs. actual comparison for the trade-offs, including the fact that simplified-method years generate no depreciation and therefore nothing to recapture later.

Insurance — Line 15, and One Coverage This Trade Needs

Your shop routinely holds instruments that belong to other people, some of them irreplaceable.

• General liability — a customer's injury on your premises, property damage on a house call
• Bailee coverage for customer instruments in for repair or consignment sale. A general liability policy insures your liability; bailee coverage insures the instrument itself while it's in your care, custody, and control — the vintage archtop sitting on your bench when the shop floods is a bailee claim, not a general liability one
• Shop contents and equipment coverage — the CNC machine, spray booth, and tool inventory
• Tonewood and finished-inventory coverage for stock, particularly aged or reserved sets that would be difficult or impossible to replace at any price

All of it is deductible on Line 15. Commercial auto coverage travels with the vehicle — inside actual expenses if you use that method, and never stacked on top of the standard mileage rate, which already has insurance built into the per-mile figure. Health insurance premiums take the separate self-employed health insurance deduction on Schedule 1, not Line 15.

Licensing & Compliance — Line 23 / Line 27a

• Local business license and any home-occupation permit for the workshop
• Sales tax permit and resale certificate, so tonewood and hardware bought for resale in a finished instrument aren't taxed twice
• Lacey Act declaration and customs-broker fees on imported tonewood, if you import it yourself rather than buying from a domestic supplier who already handled it
• Trade association dues and training — Guild of American Luthiers or similar membership, a finishing or CNC course, a lutherie expo — typically Line 27a as continuing education, or Line 23 when billed with a licensing fee

Everything Else — Lines 8, 11, 18, 24

• Advertising (Line 8): website, before/after photos, demo recordings, social media, an expo booth
• Phone & software (Line 22 / Line 18): business share of the cell plan, shop-management or work-order software
• Contract labor (Line 11): a 1099'd finish sprayer or CNC operator for overflow production
• Travel (Line 24a) for an out-of-town lutherie expo or wood market; 50% of business meals (Line 24b)

The QBI Deduction: Check All Three Limits, Not Just SSTB Status

Lutherie is fabrication and repair work, not a specified service trade or business under 26 U.S.C. §199A(d)(2). §199A(d)(2)(A) pulls its field list from §1202(e)(3)(A) — health, law, accounting, actuarial science, performing arts, consulting, athletics, financial services, brokerage services — applied "without regard to the words 'engineering, architecture,'" and §199A(d)(2)(B) separately adds investing, trading, and dealing in securities. Building and repairing instruments is on none of those named lists.

§1202(e)(3)(A) doesn't end at "brokerage services," though — it closes with a catch-all: "any trade or business where the principal asset of such trade or business is the reputation or skill of 1 or more of its employees," which §199A(d)(2)(A) extends to "employees or owners." Read on its own, that clause sounds broad enough to reach a maker whose name is on the headstock. It isn't. Treas. Reg. §1.199A-5(b)(2)(xiv) narrows "reputation or skill" for §199A purposes to exactly three things: (A) endorsement income, (B) licensing fees for an individual's image, likeness, name, signature, voice, trademark, or similar identity symbols, and (C) appearance fees for an event or a radio, television, or other media format. A luthier selling instruments and repair labor for actual prices — not licensing their name or image — is outside all three, no matter how well-regarded their instruments are. The regulation's own Example 14 makes the identical point about a comparable trade: a bicycle sales-and-repair shop whose employees "have acquired substantial skill and reputation in the field" is still "not engaged in an SSTB."

That clears one of three independent limits, and it's easy to stop the analysis there:

1. SSTB phase-out — doesn't apply; lutherie isn't an SSTB
2. W-2 wage / 2.5%-of-property cap — under §199A(b)(2)(B), the greater of 50% of W-2 wages or 25% of W-2 wages plus 2.5% of the unadjusted basis of qualified property. It only engages above the 2026 threshold amount: $201,750 single, $403,500 joint (Rev. Proc. 2025-32, §4.26)
3. 20%-of-taxable-income cap — §199A(a)(2) limits the deduction to 20% of taxable income over net capital gain, and §199A(e)(1) computes that taxable income "without regard to any deduction allowable under this section" — meaning the QBI deduction itself isn't added back, but the standard or itemized deduction already came out. This one applies to every filer, every year, at every income level

A Realistic Solo Year

A single-filer luthier running "Ito Lutherie" — custom acoustic builds plus a repair and setup bench, out of a 240-square-foot detached workshop — no employees, no other income, no itemizing, 2026:

node -e "
const buildCashPortion = 4200 - 650; // one representative build's cash after the \$650 trade-in credit
const customBuildCashReceipts = 126000; // cash portion across all custom builds this year, net of trade-in credits
const tradeInFMV = 650; // that trade-in's FMV, included in gross receipts under Treas. Reg. Sec. 1.61-2(d)(1)
const repairSetupReceipts = 58000; // repair/setup labor + incidental materials
const tradeInResalePrice = 900; // the traded-in guitar, resold later in the year
const grossReceipts = customBuildCashReceipts + tradeInFMV + repairSetupReceipts + tradeInResalePrice;

const buildMaterials = 38500; // tonewood, bracing, purfling/binding, finish for builds, tuners, bridges, nut/saddle blanks, strings for new builds
const tradeInCOGS = tradeInFMV; // basis in the resold trade-in instrument
const cogs = buildMaterials + tradeInCOGS;

const grossProfit = grossReceipts - cogs;

const sec179Equipment = 7800; // CNC fret slotter, thickness sander, spray-booth exhaust system, workbench
const supplies = 1850; // sandpaper, tape, glue for repairs, small tools, rags
const milesH1 = 2600, milesH2 = 3100;
const rateH1 = 0.725, rateH2 = 0.76;
const mileageH1 = milesH1 * rateH1;
const mileageH2 = milesH2 * rateH2;
const vehicle = mileageH1 + mileageH2;
const insurance = 2050; // liability + bailee (customer instruments in shop) + tonewood/vintage stock property coverage
const licensing = 340; // local business license + Lacey Act declaration/customs broker fees on imported tonewood
const contractLabor = 3200; // 1099 finish sprayer / CNC operator for overflow
const advertising = 980;
const phoneSoftware = 650;
const other = 520; // Guild of American Luthiers dues, continuing ed

const partIIExpenses = sec179Equipment + supplies + vehicle + insurance + licensing + contractLabor + advertising + phoneSoftware + other;

const shopSqFt = 240;
const allowableSqFt = Math.min(shopSqFt, 300);
const homeShop = allowableSqFt * 5; // Line 30, simplified method — fully captured, under the 300 sq ft cap

const netProfit = grossProfit - partIIExpenses - homeShop;

const seTaxable = netProfit * 0.9235;
const seTax = seTaxable * 0.153;
const halfSeTaxDeduction = seTax / 2;

const standardDeduction = 16100;

const qbi = netProfit - halfSeTaxDeduction;
const taxableIncomeBeforeQBI = netProfit - halfSeTaxDeduction - standardDeduction;

const tentativeQbiDeduction = qbi * 0.20;
const taxableIncomeCap = taxableIncomeBeforeQBI * 0.20;
const qbiDeduction = Math.min(tentativeQbiDeduction, taxableIncomeCap);

const finalTaxableIncome = taxableIncomeBeforeQBI - qbiDeduction;

const fmt = n => n.toLocaleString('en-US', {minimumFractionDigits:2, maximumFractionDigits:2});

console.log('buildCashPortion (one job)', fmt(buildCashPortion));
console.log('mileageH1 (2,600 mi x \$0.725)', fmt(mileageH1));
console.log('mileageH2 (3,100 mi x \$0.76)', fmt(mileageH2));
console.log('vehicle total', fmt(vehicle));
console.log('grossReceipts (Line 1)', fmt(grossReceipts));
console.log('cogs (Part III -> Line 4)', fmt(cogs));
console.log('grossProfit (Line 5)', fmt(grossProfit));
console.log('partIIExpenses', fmt(partIIExpenses));
console.log('homeShop (Line 30, 240 sq ft, under the 300 cap)', fmt(homeShop));
console.log('netProfit (Line 31)', fmt(netProfit));
console.log('seTax (15.3% of 92.35%)', fmt(seTax));
console.log('halfSeTaxDeduction', fmt(halfSeTaxDeduction));
console.log('QBI', fmt(qbi));
console.log('taxableIncomeBeforeQBI', fmt(taxableIncomeBeforeQBI));
console.log('tentativeQbiDeduction (20% of QBI)', fmt(tentativeQbiDeduction));
console.log('taxableIncomeCap (20% of TI before QBI)', fmt(taxableIncomeCap));
console.log('qbiDeductionAllowed', fmt(qbiDeduction));
console.log('cap bites by', fmt(tentativeQbiDeduction - taxableIncomeCap));
console.log('finalTaxableIncome', fmt(finalTaxableIncome));
"

Output:

buildCashPortion (one job) 3,550.00
mileageH1 (2,600 mi x $0.725) 1,885.00
mileageH2 (3,100 mi x $0.76) 2,356.00
vehicle total 4,241.00
grossReceipts (Line 1) 185,550.00
cogs (Part III -> Line 4) 39,150.00
grossProfit (Line 5) 146,400.00
partIIExpenses 21,631.00
homeShop (Line 30, 240 sq ft, under the 300 cap) 1,200.00
netProfit (Line 31) 123,569.00
seTax (15.3% of 92.35%) 17,459.74
halfSeTaxDeduction 8,729.87
QBI 114,839.13
taxableIncomeBeforeQBI 98,739.13
tentativeQbiDeduction (20% of QBI) 22,967.83
taxableIncomeCap (20% of TI before QBI) 19,747.83
qbiDeductionAllowed 19,747.83
cap bites by 3,220.00
finalTaxableIncome 78,991.30

Gross receipts of $185,550.00 — which include the $650.00 trade-in FMV and the $900.00 later resale of that same instrument — less $39,150.00 of Cost of Goods Sold leaves $146,400.00 in gross profit. Subtract $21,631.00 of Part II operating expenses and the $1,200.00 home-workshop deduction on Line 30 and net profit is $123,569.00. Because the 240-square-foot workshop sits under the simplified method's 300-square-foot ceiling, every square foot counts — unlike a larger shop, nothing is left on the table here by choosing the easy method.

On the QBI side: half the self-employment tax deduction ($8,729.87) brings qualified business income to $114,839.13. Subtracting the $16,100.00 standard deduction puts taxable income before the QBI deduction at $98,739.13 — well under the $201,750 single threshold, so neither the SSTB phase-out nor the W-2-wage/2.5%-property cap is in play. A naive "20% of QBI" calculation would claim $22,967.83. But the 20%-of-taxable-income cap (§199A(a)(2)) is only $19,747.83 — with no other income to absorb the standard deduction, the cap runs short of the naive figure by exactly 20% of that $16,100.00 standard deduction, or $3,220.00, regardless of how large QBI itself is. The allowed QBI deduction is $19,747.83. Final taxable income: $78,991.30, which falls inside the 2026 single 22% bracket ($50,400–$105,700, per Rev. Proc. 2025-32, §4.01) — a materials-heavy custom-build year can push a solo luthier into that bracket even after every deduction above is applied.

Audit Triggers & Common Mistakes

1. Reporting only the cash collected on a trade-in job, not the trade-in's FMV. Treas. Reg. §1.61-2(d)(1) requires the full stipulated price in gross income. Reporting $3,550 instead of $4,200 on a job with a $650 trade-in understates receipts by exactly the value of the instrument you took in.
2. Deducting the traded-in instrument's full resale price as though it had no basis. It has a basis — the FMV you already included in income when you took it in. Reporting $900 of pure profit on the resale instead of $250 double-counts the $650.
3. Running the same tonewood through both COGS and Line 22 in the same year. Pick a treatment per job category — build materials in COGS, repair incidentals on Line 22 — and stay consistent.
4. Treating the CNC fret slotter or thickness sander as a supply instead of equipment. A $4,000 machine expensed on Line 22 instead of Section 179'd on Line 13 stands out if the IRS cross-references your equipment against the insured-property schedule behind your Line 15 policy.
5. Skipping the July 1 mileage-rate split. A full year of house-call and delivery miles multiplied by a single annual rate understates the deduction for every mile driven after the increase and reads like an estimate, not a log.
6. Claiming a detached workshop that isn't exclusively used. §280A(c)(1)(C) has a low bar, but "exclusively used on a regular basis" is in the statute's opening words. A workshop that also stores the lawn mower or the family car doesn't qualify.
7. Claiming a flat "20% of profit" for QBI. Not being an SSTB clears one of three limits. The taxable-income cap is independent of it, and any preparer or examiner can recompute it in under a minute.

The defense in every case is the same: decide and document at the work order, not at filing. Flag each job build or repair, log a trade-in's agreed value the moment you take the instrument in, capture equipment and supplier receipts the day they arrive, log miles at the stop, and keep records for the period the IRS expects.

How CentSense Helps

CentSense tags every receipt, trade-in, and mileage entry to the right Schedule C line the moment you capture it — no April reconstruction from a supplier statement or a fading memory of what a trade-in was worth:

• Scan the tonewood and hardware supplier receipt with AI the day you buy it, and tag it to Cost of Goods Sold or Line 22 supplies right there, based on whether the job is a build or a repair
• Log a trade-in's agreed value the day you take the instrument in, so both the income inclusion and the resale basis are captured before the paperwork disappears
• Categorize the CNC machine, sander, and spray-booth system as Section 179 equipment on Line 13, separately from consumables
• Log house-call, delivery, and supplier miles automatically, with the two 2026 half-year rates applied to the correct halves of the log
• Keep insurance, licensing, and any import-related fees visible as they're paid, so they land in your quarterly estimated taxes instead of surfacing in April
• Export a CPA-ready category breakdown as CSV when the return is due

For closely related trades, see Freelance Carpenter & Woodworker Tax Deductions, Upholsterer Tax Deductions, and Musician & Music Teacher Tax Deductions.

Authoritative References

• IRS — About Schedule C (Form 1040)
• IRS — Publication 946, How To Depreciate Property (Section 179)
• IRS — Internal Revenue Bulletin 2026-04 (Notice 2026-10, 2026 standard mileage rates effective Jan 1: 72.5 cents per business mile)
• IRS — Internal Revenue Bulletin 2026-29 (Announcement 2026-11, revised standard mileage rates effective July 1, 2026: 76 cents per business mile)
• IRS — Internal Revenue Bulletin 2025-45 (Rev. Proc. 2025-32, §4: 2026 inflation adjustments — §4.01 rate tables, §4.14 standard deduction, §4.24 Section 179 limit, §4.26 §199A thresholds, §4.30 §448(c) gross-receipts threshold)
• IRS — Internal Revenue Bulletin 2013-6 (Rev. Proc. 2013-13, simplified home-office safe harbor: $5.00 per square foot, 300 square feet maximum)
• IRS — Internal Revenue Bulletin 2015-50 (Notice 2015-82, de minimis safe harbor raised from $500 to $2,500 for taxpayers without an applicable financial statement)
• 26 U.S.C. §280A — Disallowance of certain expenses in connection with business use of home (Cornell LII)
• 26 U.S.C. §280F — Limitation on depreciation for luxury automobiles; limitation where certain property used for personal purposes (Cornell LII)
• 26 U.S.C. §199A — Qualified business income (Cornell LII)
• 26 CFR §1.61-2 — Compensation for services, including fees, commissions, and similar items (Cornell LII)
• 16 U.S.C. §3372 — Prohibited acts under the Lacey Act, including the plant import declaration requirement at §3372(f) (Cornell LII)

Stop guessing whether that trade-in guitar belongs in income or which line the tonewood goes on. Start a free CentSense account, scan every supplier and trade-in receipt with AI the day it happens, tag each job build or repair while the work order is still on the bench, log house-call and delivery miles at the correct half-year rate, and export a CPA-ready Schedule C breakdown at tax time. Free tier includes 10 AI scans per month.

This guide is general education for U.S. self-employed luthiers — custom instrument builders and repair/setup shops — filing a Schedule C in 2026. It is not personalized tax advice, and it is not wildlife-trade or customs compliance advice — your facts determine the right treatment, and Lacey Act and CITES requirements vary by wood species and country of origin. Consult a CPA or EA for your situation.