Class 2a Business Deductions Generally

Class 2a Business Deductions Generally - Taxation of the...

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Unformatted text preview: Taxation of the Business Entity Online Lecture Series Business Deductions Presented by Akore Berliner, CPA Business Expense Defined Ordinary , necessary , and reasonable expenses incurred while operating a business Disallowed Business Expenses No Deduction! Tax law disallows or limits the deduction of certain types of expenses for a variety of reasons Common Disallowed or Limited Deductions Expenditures Contrary To Public Policy Penalties, fines, illegal bribes or kickbacks, two-thirds of treble damage payments for violation of anti-trust law Certain Legal Expenses Must be directly related to a trade or business , an income producing activity, or the determination, collection, or refund of a tax e.g., Landlords legal fees associated with eviction of tenant Expenses Relating To An I llegal Business Usual expenses of operating an illegal business are deductible I .e., Embezzlement, Gambling However, deduction for fines, bribes to public officials, illegal kickbacks, and other illegal payments are disallowed Trafficking in controlled substances: only cost of goods sold can reduce gross income Political Contributions & Lobbying Generally, no business deduction is allowed for payments made for political purposes or for lobbying Exceptions are allowed for lobbying: To influence local legislation, To monitor legislation, and De minimis Excessive Executive Compensation For publicly held corporations: Deduction for compensation of CEO and four other highest compensated executives is limited to $1 million each Does not include: Performance-based compensation and commissions Payments to qualified retirement plans Payments excludible from gross income Organizational Costs...
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This note was uploaded on 08/11/2011 for the course ACCT 103 taught by Professor Huxhold during the Spring '11 term at San Diego.

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Class 2a Business Deductions Generally - Taxation of the...

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