Tax Deductions for a Business

Business Tax Deductions:

  • Home Office Deduction. 

According to the IRC 26 U.S. Code ??280A, https://www.law.cornell.edu/uscode/text/26/280A

home-office must be in connection with your trade or business (or with your income-producing activity)

(1)Certain business use Subsection (a) shall not apply to any item to the extent such item is allocable to a portion of the dwelling unit which is exclusively used on a regular basis?

(A)as the principal place of business for any trade or business of the taxpayer,

(B)as a place of business which is used by patients, clients, or customers in meeting or dealing with the taxpayer in the normal course of his trade or business, or

(C)in the case of a separate structure which is not attached to the dwelling unit, in connection with the taxpayer?s trade or business.Home office deduction is often overlooked.

When the taxpayer elects the safe-harbor method (simplified method) , no depreciation deduction for the home is allowed. It means that the taxpayer doesn?t have the depreciation recapture if they sell the home someday.

Also, you can?t claim any other expenses related to the home office if you elect the safe-harbor home office deduction.Reference:Legal Information Institutehttps://www.law.cornell.edu/uscode/text/26/280A

Meals and Entertainment Deduction 

According to https://www.law.cornell.edu/uscode/text/26/274 (k)Business meals

(1)In generalNo deduction shall be allowed under this chapter for the expense of any food or beverages unless?

(A)such expense is not lavish or extravagant under the circumstances, and

(B)the taxpayer (or an employee of the taxpayer) is present at the furnishing of such food or beverages.

(2)Exceptions Paragraph (1) shall not apply to?

(A)any expense described in paragraph (2), (3), (4), (7), (8), or (9) of subsection (e), and

(B)any other expense to the extent provided in regulations.Reference: https://www.law.cornell.edu/uscode/text/26/274   Read more in detail.EditTax Deductions for a Business

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