TAX5005 - Exam 2 - IRC Summaries

TAX5005 - Exam 2 - IRC Summaries - TAX5005 Exam2...

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TAX5005  IRC Summaries Exam 2 63: Taxable income defined Gross income minus allowed deductions (other than the standard deduction) 161: Allowance of deductions Deductible items are specified in the code. 162: Trade or business expenses T REATMENT : Deduct P ROP S : (1) Ordinary (2) Necessary (3) Expenses (4) Paid or incurred during the taxable year (5) In carrying on (6) Any trade or business (7) Provided that there is adequate substantiation E XCEPTIONS : Illegal payments To Government Officials - any payment - made directly or indirectly to any official or employee of any  government - if such payment constitutes an illegal bribe or kickback To Non-Government Officials - any payment - made directly or indirectly to any person - if such payment constitutes an illegal bribe, illegal kickback, or other  illegal payment under any law - if it is a state law, that law much be generally enforced - the law must subject the violator to either a criminal penalty or the loss  of license or privilege to engage in business Lobbying and political expenses - influencing legislation, - participation in, or intervention in, any political campaign, - attempts to influence the public in respect to political matters,  or - any direct communication with a covered executive branch official in an attempt  to influence that person’s actions or position Dues to tax-exempt organizations - disallowed for the portion of dues or other payments to a tax-exempt  organization Page 1 of 7
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TAX5005  IRC Summaries Exam 2 Fines and penalties Antitrust damages - cannot deduct 2/3 of any amount paid or incurred as antitrust damages, subject  to the following conditions: - there must be a criminal proceeding,  and - there must be either a conviction, a guilty plea, or a plea of nolo  contendere Excessive employee salaries - for publicly held corporations, deduction limited to $1,000,000 E XCEPTIONS   TO   EXCEPTIONS : Lobbying and political expenses - legislation of any local council, including Indian tribal government - expenses to ‘influence legislation’ are deductible, provided they meet  the criteria for deductibility - in direct connection with appearances before, submission of  statements to, or sending communications to the committees,  or individual members, of such council or body with respect to  legislation or proposed legislation of direct interest to the  taxpayer, or  - in direct connection with communication of information between 
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TAX5005 - Exam 2 - IRC Summaries - TAX5005 Exam2...

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