Acct 308 Chap6 lesson - CCH Federal Taxation Comprehensive...

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CCH Federal Taxation Comprehensive Topics Chapter 6 Deductions: General Concepts and Trade or Business Deductions ©2005, CCH INCORPORATED 4025 W. Peterson Ave. Chicago, IL 60646-6085 800 248 3248 http://tax.cchgroup.com
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CCH Federal Taxation Comprehensive Topics 2 of 48 Four Types of Usage for Expenses and Property “Personal-use” property refers to the function of property. It means that the property is held for the taxpayer’s own enjoyment. “Personal” property refers to the physical nature of the property. It means that the property is mobile, i.e., not affixed to “real” property. The following examples illustrate the four types of usage for expenses, personal property, and real property. Chapter 6, Exhibit 1a
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CCH Federal Taxation Comprehensive Topics 3 of 48 Type of Usage Expense Personal Property (property that is mobile) Real Property (property that is immobile) Tangible (value lies in its physical substance) Intangible (value lies in its nonphysical substance) Business Use Airfare to meet with client to discuss cost control Lawnmower used by landscape firm Stock held as inventory by dealer Office building Chapter 6, Exhibit 1b Four Types of Usage for Expenses and Property
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CCH Federal Taxation Comprehensive Topics 4 of 48 Type of Usage Expense Personal Property (property that is mobile) Real Property (property that is immobile) Tangible (value lies in its physical substance) Intangible (value lies in its nonphysical substance) Hobby Use Airfare to attend Barbie™ doll collectors convention Lawnmower held by one who tinkers with old motors in spare time N/A Home office used exclusively for stamp collecting Chapter 6, Exhibit 1c Four Types of Usage for Expenses and Property
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CCH Federal Taxation Comprehensive Topics 5 of 48 Type of Usage Expense Personal Property (property that is mobile) Real Property (property that is immobile) Tangible (value lies in its physical substance) Intangible (value lies in its nonphysical substance) Investment Use Airfare to attend investmen t seminar First lawnmower ever sold by John Deere Co. held by private individual Stock held by investor Raw land Chapter 6, Exhibit 1d Four Types of Usage for Expenses and Property
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CCH Federal Taxation Comprehensive Topics 6 of 48 Type of Usage Expense Personal Property (property that is mobile) Real Property (property that is immobile) Tangible (value lies in its physical substance) Intangible (value lies in its nonphysical substance) Personal Use Airfare to visit grandmother Lawnmower used for personal lawn care N/A Principal residence Chapter 6, Exhibit 1e Four Types of Usage for Expenses and Property
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CCH Federal Taxation Comprehensive Topics 7 of 48 Tax Treatment for the Four Types of Usage Usage Tax Treatment for Losses and Expenses Business Unlimited deductions, except for passive activity losses (usually offers the most favorable tax treatment) Hobby Limited to net hobby income Investment Capital loss limited to $3,000; investment expenses limited to net investment income Personal Generally not deductible unless specifically
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  • Summer '06
  • Lau
  • Taxation in the United States, CCH Federal Taxation, Federal Taxation Comprehensive Topics, Taxation Comprehensive Topics

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