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He would, however, need to list the replacement property within 45 days of the 180-day exchange period [ CITATION Rup16 \l 1033 ].We would also like to suggest that Mr. Jones itemize his deductions. If he decides toitemize his deductions, he can deduct his real estate and property taxes, mortgage interest,miscellaneous expenses, etc. If he decides to use the 1031 exchange that we suggested earlier,Mr. Jones will have a large amount of property taxes. There are, of course, limits to all of thesedeductions. Mr. Jones may have a home office. To determine the deduction, multiple the squarefootage of the home office, up to 300 square feet, by a fixed amount of $5, which is capped at$1,500. Mr. Jones should also dedicate a personal vehicle to be used for business only. He thencould consider a deduction such as section 179, if he meets the requirements. This would saveMr. Jones some money on his taxes. Charitable contributions could also reduce his taxableincome.
MEMO W/ APPENDIX10References26 CFR 301.7701-1 - Classification of organizations for federal tax purposes.(n.d.). Retrieved from 26 CFR 301.7701-2 - Business entities; definitions.(n.d.). Retrieved from 26 CFR 301.7701-3 - Classification of certain business entities.(n.d.). Retrieved from 26 CFR 301.7701-4 - Trusts.(n.d.). Retrieved from 26 U.S. Code § 1012-Trade or business expenses. (n.d.). Retrieved from 26 U.S. Code § 1031 - Exchange of real property held for productive use or investment. (n.d.). Retrieved from 26 U.S. Code § 1221-Capital asset defined. (n.d.). Retrieved from 26 U.S. Code § 170-Charitable, etc., contributions and gifts. (n.d.). Retrieved from 26 U.S. Code § 446 - General rule for methods of accounting. (n.d.). Retrieved from 26 U.S. Code § 448 - Limitation on use of cash method of accounting. (n.d.). Retrieved from Fitzpatrick, D. (n.d.). How Sole Proprietors Are Taxed. Retrieved from Rupert, T. J., Pope, T. R., & Anderson, K. E. (2016). Federal Taxation.Prentice Hall.Tax Guide for Small Business. (2018, January 29). Retrieved from IRS: Unlimited Liability. (n.d.). Retrieved from Investopedia: