By month: December 2006

Travel Deduction for Educational Seminars

When you combine business and personal travel, tax law contains specific rules on what you can and cannot count as a business day. These rules determine if your transportation, lodging, and meal costs are deductible in full, partially deductible, or not deductible at all.

Boots Deduction Lost

While testifying at his trial, this taxpayer learned how to deduct business clothing, gloves, and boots--too little, too late.

Poor Arguments Cause Demise of Home-Office Deduction

You need to know the rules to protect yourself not only from the IRS, but also from the courts. If you don’t take the proper position on your home-office deduction, neither the IRS nor the courts give consideration to the arguments you should have raised that would have won your deductions.

Actor Wesley Snipes Indicted for Tax Fraud

It matters not that you used a paid tax preparer to help you, you commit tax fraud and face jail time when you take illegal tax protestor positions on your tax returns.

Home Ownership Denied

When the seller does not transfer legal title to the buyer, the buyer can still be the owner when the buyer passes the beneficial ownership tests.

How Jones Brought Himself to the Attention of the IRS

When you receive a 1099 or a W-2, you should file a tax return even if no return is required.

Lack of Proper Records Crushes Deductions

Section 274 is merciless. You need a mileage log and the required elements that prove your overnight stays. Having your CPA prepare these records after the fact fails.

Tax on Children

The kiddie tax applies to unearned income. It does not apply to earned income.

Fiscal Lunacy Award #19

The federal budget is understated because it does not include amounts for tax extenders—tax laws that are scheduled to expire, but that will not expire because they will be extended. Yes, it’s lunacy.

IRS Sets 2007 Mileage Rate at 48.5 Cents

As an individual (not as a corporation), you may use IRS mileage rates in lieu of actual expenses to deduct vehicles you own or lease. The IRS rate has two components: one for operating expenses and the other for depreciation.

Unibody SUV

You may amend your tax return for missed Section 179 expensing on a unibody SUV. The truck chassis is not required for an SUV to qualify as a truck for purposes of the SUV deduction.

401(k) at Age 74

Although required to withdraw money beginning at age 70½, this age 74 taxpayer should continue to invest in his 401(k) to take advantage of tax-free compounding for an additional 12 plus years.

Real Estate Investment Seminar

This real estate boot camp deduction is allowed to the taxpayer who is classified as being “in the business” of renting real estate, but not to the taxpayer classified as an “investor in real estate.”

Mortgage Insurance on Rental

Although IRS publications give you no guidance, you may deduct mortgage insurance on your rental properties. The IRS confirms this in its answers on its Website.

Depreciation of Home Office

Claim the proper amount of depreciation on your home office to take advantage of the time value of money and avoid problems.

Payroll Service Took Taxes on Child Hire

Vigilance pays off. This payroll service did not know this rule: wages paid by a parent to his under-age-18 child are exempt from payroll taxes.

Solo 401(k)

The solo 401(k) is one great retirement vehicle for the independent contractor.


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