Multiple choicetrade or business expenses b an

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Multiple Choice—Trade or Business Expenses b. An ordinary trade or business expenditure is one which is commonly incurred by other businesses. 56. Multiple Choice—Trade or Business Expenses c. A necessary trade or business expenditure is one which is appropriate for a particular business. 57. Multiple Choice—Immediate Expensing of Capital Expenditures c. The maximum amount of capital expenditures eligible for immediate expensing under Code Sec. 179 is 58. limited to $250,000 for 2009. Comprehensive Problem—Deductible Expenses John’s tax liability is $16,100. 59. Business revenue $240,000 Business deductions ($14,000 of illegal payments would not be deductible) 151,000 Business income $89,000 Less: Personal exemption $3,650 Standard deduction 5,700 9,350 Taxable income $79,650 Tax liability $16,100 Comprehensive Problem—Employee Moving Expenses Peter’s taxable income on his 2009 individual income tax return is $27,724, computed as follows: 60. Gross income—salary $45,000 Less: Moving expense deduction Expenses to move household furniture $3,000 Travel going from old residence to new location 700 3,700 Total adjusted gross income $41,300 Less: Itemized deductions Medical expenses ($6,000 $3,098) $2,902 Charitable contributions 5,000 Miscellaneous itemized deductions ($3,000 $826) 2,174 10,076 Less: Personal exemption 3,500 Taxable income $27,724 Research Problem—Trade or Business Deductions 61. a. New Colonial Ice Co. v. Helvering , 4 USTC ¶1292, 292 U.S. 435, 54 S.Ct. 788 (CCH STANDARD FEDERAL TAX REPORTS ¶44,840.015). The Supreme Court has held in New Colonial Ice Co. that, since every deduction from gross income is a matter of legislative grace, any particular deduction is allowable only if there is a clear provision therefor and, hence, a taxpayer seeking a deduction must be able to point to an applicable statute and show that the taxpayer comes within its terms.
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104 CCH Federal Taxation—Comprehensive Topics Chapter 6 © 2009 CCH. All Rights Reserved. b. Welch v. Helvering , 3 USTC ¶ 1164, 290 U.S. 111, 54 S.Ct. 8 (CCH STANDARD FEDERAL TAX REPORTS ¶ 8470.07). Reimbursements of creditors to re-establish petitioner’s credit in building up a new business were not deductible where the debts were those of a corporation formerly owned by the petitioner and the father and the payments were made after discharge in bankruptcy of the corporation and after dissolution of the corporation. Research Problem—Trade or Business Deductions 62. a. A. Trujillo , 68 TC 670, CCH Dec. 34,554 (CCH STANDARD FEDERAL TAX REPORTS ¶ 9502.31). Employee contributions to the disability fund under the California Unemployment Insurance Code are deductible as state income taxes. Employee contributions to the New Jersey Nonoccupational Disability Bene fi t Fund under the New Jersey Temporary Disability Bene fi ts Law and to the New York Nonoccupational Disability Bene fi t Fund under the New York Disability Bene fi ts Law are also deductible as state income taxes.
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