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... are only deductible if the IRC specifically allows for the deduction.
3 types of deductions:
1. Expenses in connection w/a...
2. Expenses in connection w/...
3. Expenses specifically allowed that...
- trade or business
- income production
- subsidize activity (charitable contribution)
Any expense that falls into the first two categories of expenses is deductible if it falls within the... and is not... from deductibility.
general guidelines, specifically excluded
3 criteria for deducting business and investment expenses. (PON)
- 1. Profit-motivated
- 2. Ordinary
- 3. Necessary
The 2-part test to determine whether a business/investment expense is profit-motivated.
1. Does the expense result from a... activity or a... activity?
2. Is the activity a... or an...
- 1. profit-motivated, personal
- 2. trade/business, investment
For a business/investment expense to be ordinary,... must exist and it must be...
It also must be... deductible rather than a...
- more than a remote connection, customary in the industry.
- currently, capital expenditure.
For AGI deductions.
1. Allowable expenses from a...
2. ... expenses
3. Expenses attributable to the production of...
4. ... from the sale/exchange of trade/business/investment property
5. Contributions to qualified..., ..., or... plans
6. ... paid
7. ... expenses
8. 1/2 of the... imposed on individuals and 100% of... paid by self-employed individuals
9. Qualified ...
10. Qualified ...
11. Qualified ...
- 1. trade or business
- 2. REBE
- 3. rent/royalty income
- 4. Losses
- 5. pension, profit-sharing, retirement
- 6. Alimony
- 7. Moving expenses
- 8. SE tax, health insurance premiums
- 9. Student loan interest
- 10. Education expenses
- 11. Educator expenses
It is an... loss if from a trade or business and a... loss if from an investment.
Losses for... assets are not deductible.
To deduct qualified educator expenses, you must:
1. be an educator for... through grade...
2. work at least... hours during the school year
- 1. kindergarten, 12
- 2. 900
From AGI deductions are only beneficial when .... > ....
For AGI is typically... because from AGI deductions are based on...
more valuable, AGI
AGI acts as a limit on the amount of itemized deductions in three ways:
1. There is an... based on AGI
- 1. itemized deduction phaseout
- 2. floors
- 3. ceilings
There is a limit on capital losses of...
A qualified education loan is... incurred to... qualified higher education expenses of TP/spouse/dependent at the... debt was incurred.
debt, pay, time
Qualified higher education expenses consist of..., ..., ..., and ... incurred to attend an eligible educational institution.
tuition, fees, room, board
With regards to qualified education loan deductions, if you're a TP who is a dependent of another TP, you...
may not take the deduction.
Moving expenses are deductible... as long as the... and... requirements are met.
For AGI, time, distance
Only... moving expenses are deductible and include the cost of:
2. Cost of...
- 1. household goods and personal effects
- 2. traveling
... are not included in deductible moving expenses.
When an employer reimburses deductible moving expenses it is treated as a qualified... and... gross income.
fringe benefit, excluded from
2 parts of the time test.
1. Work for at least... weeks our of the next... weeks (full time)
2. Self-employed: Work at least... weeks out of the next... weeks (full time)
Distance test: New location of work must be greater than... miles from old residence.
If you are an eligible educator, you can deduct up to... for school supplies. (... if MFJ)
A TP may deduct office-in-home expenses only when the office is used... and... as either of the following:
1. The TP’s...
2. A place to meet with patients, clients, or customers...
- regularly, exclusively
- 1. principal place of business
- 2. in the normal course of business
The 3rd requirement for an employee to be able to deduct home office expenses is:...
for convenience of the employer.
When a TP has more than one business location, to determine the principal place of business compare the relative importance of the... at each place and the... at each location.
activities performed, total time spent working
If there is no fixed location for the T or B, the performance of administrative or management activities in... qualify it as a principal place of business.
the home office
Because home office expenses cannot create a..., to compute the deduction, the expenses are first categorized as... vs...
loss, direct, indirect
With regards to home office expenses,... expenses are deductible in full. ... expenses are allocated between the home office and the rest of the home.
With regards to home office expenses, indirect expenses are deducted in a specific order and limited to... minus... :
Tier 1: ... interest and... taxes
Tier 2: ..., ..., and anything that's not...
Tier 3: ...
- business income, direct business expenses
- Tier 1: mortgage, property
- Tier 2: utility, insurance, depreciation
- Tier 3: depreciation
With regards to home office expenses, disallowed expenses may be...
Using the simplified method when solving for the deduction of home business expenses involves:
Sq. ft. home office x $5