Business Deductions

Question 1

If expense is ORDINARY and NECESSARY because it contributes to business activity

Answer 1

it counts as a deduction

Question 2

Travel, Lodging and Meal expenses – when related to business travel away from home and overnight –

Answer 2

can count as a deduction

Question 3

Expenses for Automobile Use (services, repairs, gas, insurance, parking fees, tolls, etc)

Answer 3

can count as a deduction

Question 4

Transportation Expenses but taxpayer was not AWAY FROM HOME OVERNIGHT (taxi fares, tolls, parking, airfare)

Answer 4

can still count as a transportation deduction

Question 5

Commuting Expenses to and from work

Answer 5

do not count as deduction

Question 6

Trade or Business Insurance

Answer 6

can count as deductible (for self-employed, 100% of health insurance is deductible)

Question 7

Business Bad Debt

Answer 7

treated as an ordinary loss

Question 8

Worthless Corporate Securities

Answer 8

treated as a capital loss (schedule D)

Question 9

Expenditures for business gifts

Answer 9

up to $25 is deductible per recipient per year

Question 10

Start-up Costs and Organizational Expenditures

Answer 10

up to $5K for each is deductible

anything above that limit is amortized proportionally over 15 years (180 months) from time business begins

Question 11

Miscellaneous Business Expenses (office supplies, advertising, bank fees, professional fees)

Answer 11

can be deductible

Question 12

Political Contributions including lobbying

Answer 12

ARE NOT deductible

Question 13

Meal and Entertainment for customer or customer’s family

Answer 13

up to 50% of actual expense is deductible

Question 14

Expenses related to producing RENTAL INCOME

Answer 14

are deductible

Question 15

if rented for LESS THAN 15 DAYS, income

Answer 15

does not need to be reported

Question 16

if rented for MORE THAN 14 DAYS of year

Answer 16

deductions can be applied