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TOPICS / CORPORATIONS

Home office and other business expenses denied

It is essential to emphasize the importance of substantiation to clients and to make sure they understand the substantiation requirements and to educate clients on how to maintain accurate recordkeeping and to record transactions in real time.

Substantiation of business expenses: A review of the basics

A recent Tax Court case highlights the fact that taxpayers bear the burden of substantiating not only the amount of the deduction but also that the purpose underlying the deduction is ordinary and necessary to operating their trade or business.

Defining software development costs

Until guidance is issued, taxpayers seeking to determine the fundamental characterization of software costs in order to evaluate what expenditures fall within the scope of new Sec. 174 may find other sources helpful, including those that have historically governed this area.

Not all employee parking lots are created equal

An employer will have to make some effort to document that the parking available at an employee parking facility has no value, many employers will find that this burden is worth bearing because it allows deducting the full expenses of operating and maintaining the facility.

Deducting costs that are usually capitalized

Certain environmental cleanup costs, restaurant ‘smallwares,’ and certain vehicle replacement tires have expensing options that business owners may be unaware of.

IRS obsoletes 1958 revenue ruling on research and experimental costs

The ruling, which is being obsoleted as of July 31, allowed a taxpayer that used the expense method for research and experimental expenditures to deduct on an amended return research and experimental expenditures the taxpayer did not deduct in prior years.

Issues in allocating income under Sec. 384

Although the IRS has addressed several issues in the application of Sec. 384 with letter rulings and other guidance, the Service has yet to come out with comprehensive regulations and, thus, has yet to address several issues with its application.

Deduction of startup expenses

When is a company allowed to report as deductions on a tax return the expenses that have been incurred during the time leading up to getting the doors open for business?

M&A transactions: Deducting accrued liabilities

This item discusses the rules for deducting accrued liabilities in M&A transactions and then provides an illustration by looking at a recent IRS technical advice memorandum.