Think you know the rules for deducting employee business expenses? Take the quiz.... Read This Post
Internal revenue code section 162 starts out with a general rule of allowing a deduction for all the ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business.
But when the business expenses are fines and penalties paid to a government for the violation of any law, the general rule no longer applies. Those expenses are not deductible (section 162(f)).... Read This Post
What can the IRS do to collect when a refund is issued by mistake? The answer depends on whether the erroneous refund is a “rebate” refund or a “nonrebate” refund.... Read This Post
Donations of inventory are generally deductible at the lesser of fair market value or your basis in the inventory.
However, if your business is organized as a C corporation, you can claim an enhanced deduction for contributions of inventory or other property when the donations serve a specific purpose, such as helping the ill, the needy, and infants.... Read This Post
For tax purposes, the answer to the “capital or ordinary” question seems simple enough for income. Ordinary income includes any gain from the sale or exchange of property that is not a capital asset. Capital gain results from gain on the sale or exchange of a capital asset.
Simple can still be puzzling. The dilemma, as always, lies in the details; the solution in putting the pieces together.... Read This Post
In a recently released report, the Treasury Inspector General for Tax Administration determined that some IRS executives incorrectly classified reimbursable taxable travel expenses as nontaxable. The rules that tripped up the IRS employees involve the difference between the definition of long-term travel away from home, which is taxable, and temporary travel away from home, which is not taxable. For purposes…Read This Post
When you pay expenses for the benefit of your employer, such as vehicle expenses, work-related travel, and job-related legal fees, and you receive no reimbursement, you can generally claim an itemized deduction on your federal income tax return. The deduction is typically limited by your adjusted gross income. Do you know In addition, other rules still apply. For example, deductions…Read This Post
Given the confidentiality provisions of Internal Revenue Code Section 6103, do you know why the IRS was able to release the records of the investigation of Al Capone? When you’re researching a tax question, you may choose to stick with standard sources, such as tax guides, the IRS web site, or even a simple Google search. But the IRS issues…Read This Post
What does it mean to abandon property? For federal tax purposes, when you abandon an asset you can generally take a loss to the extent that your adjusted basis is more than the amount you realize. In English: Your adjusted basis is what you paid for the asset plus later improvements less adjustments such as depreciation. Since you typically receive…Read This Post
“Entertainment” is generally not a word you think of in relation to the US tax code. But you’re probably quite familiar with the limitations the code places on entertainment expenses such as meals. The tax code makes a distinction between entertainment activities, which includes meals, and entertainment facilities, which are “any item of personal or real property owned, rented, or…Read This Post