Accrual method taxpayers may be allowed to deduct
employment taxes on vacation/bonus pay accrued at year-end but not paid until the subsequent year.
For an organization to deduct
legal fees, they must generally be directly connected to its trade or business.
Willie should report $1,050 of rental income and can deduct
up to $1,050 of allocable rental expenses (using a 50% allocation percentage) on Schedule E.
Prepaid interest usually must be capitalized and deducted
over the life of a loan.
T does not establish and deduct
a reserve for the future expenses to be incurred in the provision of the future flight service when a customer purchases a ticket.
1.162-4 provides that the "cost of incidental repairs which neither materially add to the value of the property nor appreciably prolong its life, but keep it in an ordinarily efficient operating condition, may be deducted
as an expense." Reg.
Because the taxpayer made the contribution by the extended due date of its tax return and deducted
the full contribution on its income tax return, the only issue for decision was whether the contribution was treated as if it were actually made on the last day of the June 30,1984 tax year.
The IRS agent asserted that S could not deduct
the vacation payments on its tax year X return, because they were not ordinary and necessary business expenses of S; S did not receive the employee services that gave rise to the vacation payments, and did receive compensation from P for such payments.
274(n)(2)(B) de minimis fringe benefit exception merely because they did not charge their employees for the meals; according to the court, the taxpayers could deduct
the cost of the meals if it could reasonably determine that the meals were excludible from the employees, incomes under Sec.
* No passive loss limitations: Partners can fully deduct
their share of the partnership's operating expenses (such as rent, salaries, office expenses and professional and management fees), without regard to the passive loss limitations.
While 70% DRDs are never allowed for ACE purposes, a portion of 80% and 100% DRDs may be deducted
in computing the ACE adjustment.
1.162-5 provides that education expenses must be connected with a trade or business and then tested against four criteria to determine whether they can be deducted
. The expenditures must first be tested against two negative criteria and, assuming that neither disallows the expenditures, they must then meet one of the two positive criteria.