By month: April 2006
The properly used business condo does not run up against the vacation-home, passive-loss, or entertainment-facility rules.
Making a lot of money is no excuse for keeping bad records. Top off the bad records with failing to give adequate documentation to your CPA and you add to your misery index with negligence penalties. The taxpayer in this court case had to shell out about $5 million in taxes and over $1 million in penalties.
In this court case, the taxpayer was self-employed when he made the original sales. The original sales produced the renewal commissions. Thus, the taxpayer was self-employed with respect to the renewal commissions.
The law requires the taxpayer to maintain records sufficient to establish his income and deductions. In select circumstances, estimates provide a rational basis for deductions. With respect to vehicle, entertainment, meals, travel, and gifts; estimates are out and neither the court nor the IRS may grant your deductions without the prescribed records.
Wow! In one day, the IRS released three private letter rulings that provide a roadmap to the $250,000 (single) and $500,000 (married) home-sale profit exclusions for taxpayers who fail, because of hardship, the 2-out-of-5-year tests for ownership and use.
The discussion on the golf course does not make the golf deductible. What makes the golf deductible is the connection of the golf to the business discussion in a business setting.
Both the IRS and the courts have approved pencil as adequate for tax entries.
A marketing activity in the administratively qualified home office does not destroy the office in the home deduction.