2004 CCH Basic Principles Ch 06 - CCH Federal Taxation...

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CCH Federal Taxation Basic Principles Chapter 6 Deductions: General Concepts and Trade or Business Deductions ©2003, CCH INCORPORATED 4025 W. Peterson Ave. Chicago, IL 60646-6085 800 248 3248 http://tax.cchgroup.com
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CCH Federal Taxation Basic Principles 2 of 48 Chapter 6 Exhibits 1. Four Types of Usage for Expenses and Property 2. Tax Treatment for the Four Types of Usage 3. Business Expenses—Seven Criteria 4. Defending Tax Treatment for a Business Activity 5. Hobby Expenses—Template for Problem Solving 6. Home Office Deductions—Template for Problem Solving 7. Computing Home Office Deductions for Self- Employed Persons 8. Computing Home Office Deductions for Employees 9. Interest Expense—An Overview 10. Investment Interest Expense—Example 11. Taxes—An Overview 12. Property Taxes—Allocation Between Buyer and Seller 13. Depreciation Code Sec. 179 Election 14. Amortization 15. Research and Experimental 16. Depletion 17. Political Contributions and Lobbying 18. Business Start-Up Expenses 19. Meals and Entertainment 20. Moving Expenses 21. Student Loan Interest Chapter 6, Exhibit Contents
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CCH Federal Taxation Basic Principles 3 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 Basic Principles 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) 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 Basic Principles 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) 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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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) Investment Use Airfare to attend investmen t seminar First lawnmower ever sold by John Deere Co. held by private
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2004 CCH Basic Principles Ch 06 - CCH Federal Taxation...

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