Income Tax - Eta2 Business Expenses

Front 1

What is the exception for not accruing recurring items

Back 1

Economic performance occurs by the earlier of of 8 1/2 months after the close of year or date tp files a timely return AND
date tp files a timely return including extensions AND
item is recurring in nature AND
item is not material or accruing the item is a better match against income

Front 2

To be deductible business expenses must be both

Back 2

ordinary and necessary

Front 3

How much start up costs are deductible in 2013

Back 3

$5K However if expenses exceed $50K there is a dollar for dollar reduction until the deduction is eliminated. Organization costs that are not currently deducted may be amortized ratably over 15 years on form 4562-Depreciation and Amortization

Front 4

What costs are not included in start up costs

Back 4

deductible interest, taxes, or research and experimental costs

Front 5

If startup costs are $51K, how much may be deducted

Back 5

$51K - $50K threshold=$1K. Max deduction =$4K

Front 6

How are startup costs treated if a business never materializes

Back 6

For individual costs are not deductible; for a corporation-the costs are deductible

Front 7

What type of assessments are deductible rather than expenses

Back 7

taxes for local benefits such as maintenance, repairs or interest charges related to capital improvements

Front 8

How are insurance payments for partners and S corporation treated

Back 8

as guaranteed payments to partners. For s Corp for more than 2% s/h EEs, expense can be deducted and must also be included in shareholders' wage subject to federal income tax w/h

Front 9

How does an accrual base business treat interest owed to a related person who uses cash method

Back 9

cannot deduct interest owed until payment is made

Front 10

What is the advantage of using the simplified home office deduction

Back 10

TP can claim the full amount of allowable mortgage interest real estate taxes on hoe as itemized deductions. These deductions do not need to be allocated betwn personal and business use

Front 11

What business T&E have a 50% limit

Back 11

meals client entertainment,entertainment taxes and tips cost of room for cocktail party

Front 12

What meal expenses are 100% deductible by business tp

Back 12

If included in wages; de minius fringe benefits; for restaurant EEs, teambuilding activities; oil and gas platforms

Note 80% for transportation EEs

Front 13

What does irs look at in determining deductible entertainment expenses

Back 13

clear business setting and substantial distractions

Front 14

When is the standard mileage rate of 56.5 cents per mile prohibited

Back 14

If 5 or more cars are operated at same time, if accelerated depreciation was used, if section 179 deduction if claimed special depreciation allowance on care

Front 15

What gifts are not subject to the $25 limit

Back 15

promotional items that have business name imprinted on it or signs, display racks

Also costs for packaging, mailing and insuring $25 gift.

Front 16

What business expenses are not deductible

Back 16

political contributions, lobbying expenses, country clubs,

Front 17

Can self employed tp deduct contributions on Sch C

Back 17

No. Only corporations ay deduct contributions and then limited to 10% of TI

Front 18

How are advance payments treated

Back 18

If over 12 months, deduct ratably

Front 19

How are sales taxes treated

Back 19

The amount of taxes collected and remitted should be excluded from tp taxable gross income and deductible expenses

Front 20

What is the final deadline for SEs or small ERs to establish a simple IRA

Back 20

October 1 provided the plan sponsor did not previously maintain another SIMPLE IRA. If SIMPLE IRA plan was previously established, a SIMPLE IRA may be set up effectively only on January 1

Front 21

If a car allowance is provided 2 employees with out accountability how is it treated as a deduction

Back 21

As wages subject to employment taxes

Front 22

If a business recovers a bad debt that was deducted in a prior year, how is the recovered amount treated

Back 22

It is included in income in the year recovered . No need to amend a prior year's return

Front 23

When may a tp deduct a portion of home operating expenses and depreciation

Back 23

when tp Uses a portion of his HOME exclusively for business purposes

Front 24

What is the tax free amount of employee achievement Awards

Back 24

$400 for it non qualified; 1600 for all awards

Front 25

A businessman can deduct up to $2,000 per year of expenses for attending conventions, seminars, or similar meaning held on cruise ships if what requirements are met

Back 25

The cruise ship provides a statement that it has adequate facilities to accommodate the needs of the Convention seminar or meeting.

Front 26

What are deductions and limits on home office

Back 26

Cannot exceed the net income of the business or create a loss. Must first deduct expenses that would normally be allowed such as mortgage interest. For self-employed individuals it is deducted on Schedule C after completing the form. For employees the deduction is from agi 2% miscellaneous itemized deductions

Front 27

What are the limitations for interest incurred for an in investment

Back 27

The deduction is limited to interest on money borrowed to buy property that will produce investment income or that you expect to appreciate in value. You cannot deduct interest when the property produces nontaxable income. Interest incurred for an investment in a passive activity generally does not qualify for investment interest deduction

Front 28

What items are not included in calculating the net operating loss for the current year for individuals and Estates and trust

Back 28

Deductions not related to your trade or business such as alimony, health,IRA, standard deduction, most itemized deductions the personal exemption