Business and Investment Deductions

Question 1

Hobbies

Answer 1

Losses and expenses from activities no engaged in profit are NOT deductible.

Business for profit LOOK TO INTENT OF TAXPAYER

Question 2

Attorney’s Fees

Answer 2

Defendant: origin of claim if personal no deduction.

Plaintiff: type of relief sought, If Nontaxable (i.e., repair damages)

Question 3

Tax Advice

Answer 3

Always deductible

Question 4

Home Offices

Answer 4

No deduction for depreciation, insurance, maintenance, utilities, unless taxpayer uses home office EXCLUSIVELY for business purpose.

home office must be: principal place of business OR meeting place with client/customers OR structure detached from house

Question 5

Child Care

Answer 5

Limited Tax Credit

Credit is percentage of child/elder care expenses 20% to 35% depending on income.

Expenses capped at $3000 for one dependent, $6000 for low income, two or more dependents

Question 6

Travel

Answer 6

Deductible if primary purse is business or investment.

No travel deduction for bringing spouses along.

If stay is longer than a year automatically deemed as permanent or indefinite and no deduction.

Question 7

Meals

Answer 7

Meals only 50% deductible

Question 8

Entertainment

Answer 8

Cost to entertain clients, customers, recruit is dedcutible if BONA FIDE BUSINESS discussion happends

50% deductible

Question 9

Work Cloths

Answer 9

Deductible only if specialized and clothing not adaptable to general wear

Question 10

Education

Answer 10

Deductible only if maintaining or improving skills needed for job tax payer already has.

Question 11

NON DEDUCTIBLE BUSINESSES AND INVESTMENT ACTIONS

Answer 11

lobbying (except local government) Bribing, fines, kickbacks, unreasonable compensation, highly unusual expense.