Card Set Information

2010-05-30 17:17:39
Business Deductions

Business deduction
Show Answers:

  1. When is a business presumed to be a hobby?
    If not for profit. Business if it makes profit for three of the past five consecutive years.
  2. What are travel expenses?
    These are for overnight trips. These expenses are deductible (meals/entertainment = 50%). Cannot be for spouse (unless bona fide); not commuting;
  3. When can travel be deducted when going from residence to a business?
    1. Temporary work location outside the metropolitan area. Less than one year. 2. Home office.
  4. What can be deducted for foreign travel?
    Generally, must allocate between business and personal (unless most of it is business). No allocation if trip is less than week and not meant for vacation or less than 25% of time was personal. If more than a week or 25% on personal, deduction will be denied.
  5. For travel expenses, what is the tax home?
    If multiple, look at: 1) total time spent at each place; 2) the degree of business activity at each place of business; 3) the relative income earned at each place of business.
  6. What is the standard mileage rate for business travel?
    55 cents per mile. Cannot be used if own/lease five or more vehicles. Or for taxis/limos etc.
  7. If worthless, a business debt is treated as what?
    Ordinary income. If nonbusiness, then it is a short-term capital loss.
  8. COGS a deduction?
    No. It's a reduction in gross income.
  9. Expenses to purchase a tax-exempt bond deductible?
  10. How long must a property be rented to get deductions?
    14 days during the year. Also, there is no need to report rental income.