T12S-Chp-05-1-Intro-to-Bus-Expenses-Spring-2012

T12S-Chp-05-1-Intro-to-Bus-Expenses-Spring-2012 - Chapter 5...

Info iconThis preview shows pages 1–11. Sign up to view the full content.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Chapter 5 Introduction to Business Expenses Howard Godfrey, Ph.D., CPA UNC Charlotte Copyright © 2011 Dr. Howard Godfrey Edited September 19, 2011. Part-1. Reporting Deductions , Conduits Part-2. Classification of Expenses – Profit motivated, Trade or business or Production of income, Rental, Personal, Mixed business and pleasure. Part-3. Tests for Deductibility –Ordinary, etc., Not personal, Not capital exp., Public policy, Not related to tax-exempt income, For taxpayer’s benefit Part-4. Limited Mixed-Use Expenses - Hobby, Vacation home, Home office Part-5. Timing – Cash basis, Accrual basis, Related party accrued expenses, Financial accounting and tax differences Intro. to Bus. Expenses Not a Capital Expenditure Introduction Not Frustrate Public Policy Reporting Deductions Not for Tax-Exempt Income Conduit Entity Reporting For Taxpayer's Benefit Types of Deductions Limited Mixed-Use Exp. Profit-Motivated Expenses Hobby Expenses Trade or Business Expenses Vacation Homes Production-of-Income Home Office Expenses Rental Activity Timing - Acct. Methods Personal Expense Cash Method Mixed Bus. & Personal Exp. Accrual Method Tests for Deductibility Related Party Accruals Ord., Necessary, Reasonable Financial vs.Tax Accounting Not a Personal Expense Summary 5. DEDUCTIONS Barb is a CPA. She operates a tax practice During the year, she spent the following: Annual CPA license renewal fee: $500 Fees for CPE courses to meet State CPA Board Requirement: $2,000 Tuition for first semester in law school - attending night school: $8,000 How much is deductible Educational Expenses Barb is a CPA. She operates a tax practice During the year, she spent the following: Annual CPA license renewal fee: $500 Fees for CPE courses to meet State CPA Board Requirement: $2,000 Tuition for first semester in law school - attending night school: $8,000 How much is deductible $2,500 Educational Expenses Reporting Deductions Conduit Entities Income & Exp. Facts AGI From AGI T-Income Wages earned $60,000 Alimony Paid (10,000) NC Income Tax (4,000) Charity (3,000) Union Dues (1,200) AGI Itemized ded. Exemption Tax. Income Taxable income? (single - 1 exemption) - 2011 Income & Exp. Facts AGI From AGI T-Income Wages earned $60,000 $60,000 Alimony Paid (10,000) (10,000) NC Income Tax (4,000) Charity (3,000) Union Dues (1,200) AGI 50,000 Itemized ded. Exemption Tax. Income Taxable income? (single - 1 exemption) - 2011 Income & Exp. Facts AGI From AGI T-Income Wages earned $60,000 $60,000 Alimony Paid (10,000) (10,000) NC Income Tax (4,000) (4,000) Charity (3,000) (3,000) Union Dues (1,200) (200) AGI 50,000 Itemized ded. (7,200) Exemption (3,700) Tax. Income 39,100 Taxable income? (single - 1 exemption) - 2011 10 Entity Reporting Al and Beth partnership’s income of $37,000 in 2011 included the following: Dividend income $ 1,000 Long‑term capital gain 4,000 They share profits and losses equally....
View Full Document

Page1 / 141

T12S-Chp-05-1-Intro-to-Bus-Expenses-Spring-2012 - Chapter 5...

This preview shows document pages 1 - 11. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online