Chapter 16 - Other Deductions

Chapter 16 - Other Deductions - Chapter 16 Other Deductions...

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Chapter 16 – Other Deductions Interest Taxes Charitable Contributions
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Other Deductions Even though these deductions are deductible under 162 and 212, they are also deductible at times when you are not operating a business or investment. General rule of §261: “In computing taxable income, no deduction shall in any case be allowed in respect of the items specified in this Part (IX).
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Other Deductions §262 disallows any deductions for living, personal or family related expenses. Unless you can find a specific code section authorizing the deduction, you cannot deduct it §263 deals with capital expenditures.
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Section A (of the text) This section basically tells us that Congress uses the income tax code to subsidize certain things it finds desirable for one reason or another. Interest on mortgages – to encourage home ownership Charitable contributions – to encourage giving State taxes (some) – to encourage states to raise their own revenue.
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Interest §163 governs the deductibility of all types of interest expense. For individuals, interest is generally NOT deductible unless it falls into one of the following: Qualified residence mortgage Qualified home equity debt Qualified education debt Investment interest
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Interest Rev Rul 69-188 issue: whether something called a “loan processing fee” is interest and thus potentially deductible? Answer: regardless of what it is called – points, loan origination fee, loan processing fee – if it is paid for the purpose of obtaining the loan, it is interest. Deductibility depends upon for what the loan proceeds are used.
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Points on refinances: if you refinance a loan and pay points on the refi, you will be able to deduct the points (provided the underlying loan is a qualifying one), but will only be allowed to amortize them over the life of the new loan. Points on original debt:
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This note was uploaded on 09/27/2008 for the course BUS 1000 taught by Professor Professor during the Spring '08 term at Cal Poly.

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Chapter 16 - Other Deductions - Chapter 16 Other Deductions...

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