Expenses & Deductions

Proposed Regs. Clarify Research Expenditure Eligibility Under Sec. 174

The IRS in September issued proposed regulations clarifying the application of Sec. 174 to the costs to create “pilot models” or prototypes. The proposed rules state that the reason a taxpayer creates a prototype or other product, and not its subsequent sale or use, determines whether it qualifies under Sec. 174.

Repair Regulations Are Finally Issued

The IRS issued long-awaited final and proposed regulations regarding the treatment of expenditures incurred in acquiring, producing, or improving tangible assets.

The Challenge of Contributing Off-Spec Food to Charity

Donations of “off-spec” food may not result in a charitable contribution deduction greater than the tax basis of the food inventory  because of the difficulty of determining the proper tax basis and FMV for the food.

Nonrefundable Milestone Fees Do Not Qualify as Success-Based

A business can expense 70% of “success-based fees,” meaning amounts that are contingent on the successful closing of a covered transaction. It is important to remember this safe-harbor election can apply to both sides of the transaction.

Prop. Regs. Provide Guidance on Meals and Entertainment Expenditures

Proposed regulations clarify the definition of a reimbursement or other expense allowance arrangement and provide guidance on the applicability of the Sec. 274(e)(3) exception under various circumstances including employer/employee, two-party, and multiparty arrangements.

Newsletter Articles

SPONSORED REPORT

How the Election May Affect Taxation of Business Income

This report summarizes recent proposals to reform the U.S. business income tax system and considers the path to enactment of any such legislation.

PRACTICE MANAGEMENT

CPAs Contend With Tax ID Theft

Tax-related identity theft fraud remains a widespread problem that is often difficult for victims and their tax preparers to correct.