Tax Acct Notes - Chapter 6

Tax Acct Notes - Chapter 6 - 4 Activities must be ordinary...

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Taxable Activities 1. Trade or Business Activities 2. Investment 3. Personal Business Expenses – must be ordinary, necessary, and reasonable Rent and Royalty Expenses – Schedule E – for AGI deduction Losses and Gains from Business Assets – Schedule D – individuals can deduct up to $3,000 losses per year Meals and Entertainment – 50% deductible 1. Must document 2. Must be directly related or associated with business 3. Must have business purpose relationship with person entertained
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Unformatted text preview: 4. Activities must be ordinary, necessary, and reasonable 5. No deductions for club memberships 6. M&E plans 1. Accountable Plan a. Employer – 50% deduction b. Employee – reimbursed; not included in income 2. Non-accountable plan a. Employer – fully deductible b. Employee – subject to 50% limit, any reimbursements are income Indirectly Related to Business...
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