who:cyndy harnett cyndy currently works at kelley services, a staffing company that specializes in...

Who:Cyndy Harnett

Cyndy currently works at Kelley Services, a staffing company that specializes in filling business and education positions. Come find out what employers are looking for in

employees in today’s market When:Thursday, March 5, 7 p.m.

Where:LRC 235

AMS

$2 for non-members

ADMINISTRATIVE MANAGEMENT SOCIETY

AFFILIATE OF

Jeff OwensHR Manager, Hogan Taylor

“The HR Practitioner’s Role in Team Building”

11 a.m. Monday, March 9, 2009 GC 3116

$3 for non-members

© Copyright 2001-2005 by M. Ray Gregg. All rights reserved.

3

presents

Tim Abrahamswith the New York Office of

PricewaterhouseCoopers LLP

“Forensic Accounting”

Monday, March 9 - GC 5116registration 6:10 – 6:25 p.m.meeting begins at 6:30 p.m.

$3 for non-members


4

Federal Income Tax

(Business) Deductions


5

Perspective


6

Gross Income- FOR= AGI- FROM= Taxable Income

Business

Personal


7

General Requirements• Problem 6 – 9

– Ordinary

– Necessary

– Reasonable


8

General Requirements• Problem 6 – 9

– Ordinary

– Necessary

– Reasonable

• Related to income production• Customary; usual

• Appropriate; helpful• “Prudent person”• Would others have incurred it?

• In amount• Not excessive when compared to industry


10

The Four “Nots”


11

The Four “Nots”

• Contrary to public policy

• Capital

• Personal

• Related to tax-exempt income


12

The Four “Nots”• Problem 6 – 11

Why are expenses related to tax-exempt income disallowed?

• Income not included; expenses not deducted


13

Which is better?

For From


14

Why is For better?• Reduces TI for full amount even if

standard deduction is used• From not beneficial unless >

standard deduction• Many items from are limited by AGI

percentage reducing the benefit• Taxability of SS benefits based on

AGI


15

Business Expenses

• Generally…

–Self-employed = “for”

–Employee = “from”


16S

tep

1:

Th

eory

Ste

p 2

?

Ste

p 3

:P

ractic

e


17

GI- FOR= AGI- FROM= TI

“Tier 1”

“Tier 2”


18

For vs. From• Problem 6 – 13


19

Problem 6 - 13

a. Deductible? Yes For or from?

FROM – employEE

b. Two sources of income? Split:

Self-employed = FOR Employed = FROM


20


“Tier 1”

“Tier 2”


21

Tier 2 ExpensesReduced by2% of AGI

to determine deductible amount


22

Most itemized deductionsare “Tier 1”

Refer to text page 7-36


23

Refer to text page 7-36

Less 2%

“Tier 2”Expenses

Sub-total


24


• Problem 6 – 33


25

For or Tier 1Ded? From? or Tier 2?

Travel to clients $750Subs to prof journals 215Lunches w/ clients 400Photocopying 60

Problem 6 - 33

Yes FromYes FromYes FromYes From

a. Deductible?

2222


26


“Tier 1”

“Tier 2”


27

For orDed? From?

Travel to clients $750Subs to prof journals 215Lunches w/clients 400Photocopying 60

Problem 6 - 33

YesYesYesYes

ForForForFor

b. If reimbursed…

No "Tiers" with FOR


28

Business Expenses

• Self-employed–“for”

• Employee–Reimbursed?

•Yes = “for”•No = “from”


29

Problem 6 - 33For or

Ded? From?

Travel to clients $750Subs to prof journals 215Lunches w/clients 400Photocopying 60

YesYesYesYes

ForForForFor

c. If self-employed…


30


• Problem 6 – 33


32

Chapter 9• Travel and Transportation• Automobile Expenses• Entertainment• Moving Expenses

• Education Expenses• Home Office• Reimbursements• Hobby losses (from Chap 6)


33

Travel and Transportation

• Define travel

–“away from home overnight”

–Name some


34


• Define travel


–Name some


35


• Define travel


–Name some

• Define transportation

• Problem 9 -56


36

Problem 9 - 56

Airfare $ 450

Meals ($50 per day) 250

Hotel ($100 per day) 500

Entertainment 500

Total $1,700

assume he was NOT reimbursed


37

Airfare Deductible?

A B

C


38

Airfare Deductible?

A B

C


39

Airfare Deductible?

A B

C

1/32/3


40

Exemption


41

Prorate Exemption?

1/3? 2/3?


42

Airfare Deductible?

A B

CNever prorate airfare.


43

Airfare Deductible?

A B

CPrimary reason?


44

Airfare Deductible?

A B

C


45

• Purely business expenses on a personal trip ARE deductible

• Purely personal expenses on a business trip are NOT deductible


46

Problem 9 - 56

Airfare $ 450



Entertainment 500

Total $1,700



47

Problem 9 - 56

Airfare $ 450 $450



Entertainment 500

Total $1,700



48

Problem 9 - 56

Airfare $ 450 $450

Meals ($50 per day) x 3 250 $150


Entertainment 500

Total $1,700



49

Problem 9 - 56

Airfare $ 450 $450

Meals ($50 per day) x 3 250 $150


Entertainment 500

Total $1,700


50% limit


50

Problem 9 - 56

Airfare $ 450 $450

Meals ($50 per day) x 3 250 $ 75


Entertainment 500

Total $1,700



51

Problem 9 - 56

Airfare $ 450 $450

Meals ($50 per day) x 3 250 $ 75

Hotel ($100 per day) x 3 500 $300

Entertainment 500

Total $1,700



52

Problem 9 - 56

Airfare $ 450 $450

Meals ($50 per day) x 3 250 $ 75

Hotel ($100 per day) x 3 500 $300

Entertainment 500 $250

Total $1,700


50% limit


53

Problem 9 - 56

Airfare $ 450 $450

Meals ($50 per day) x 3 250 $150

Hotel ($100 per day) x 3 500 $300

Entertainment 500 $250

Total $1,700


Deductible FROM – Tier 2


54

Problem 9 - 56

Airfare $ 450



Entertainment 500

Total $1,700

assume he WAS reimbursed


55

Problem 9 - 56

Airfare $ 450 0

Meals ($50 per day) 250 0

Hotel ($100 per day) 500 0

Entertainment 500 0

Total $1,700


a. none deductible by Mike


56

Problem 9 - 56

Airfare $ 450 0


Hotel ($100 per day) 500 0

Entertainment 500 0

Total $1,700


b. reimb not reported by Mike


57

Problem 9 - 56

Airfare $ 450 450


Hotel ($100 per day) 500 300

Entertainment 500 250

Total $1,700


c. all deductible by employer


58

Problem 9 - 52Automobile $2,500Moving Expenses 4,000Entertainment 1,500Travel 2,000Meals 500Prof Dues and Subs 500

Have “issues” with any of these?Same facts as textbook?


59

Problem 9 - 52Automobile $2,500Moving Expenses 4,000Entertainment 750Travel 2,000Meals 500Prof Dues and Subs 500


60

Problem 9 - 52Automobile $2,500Moving Expenses 4,000Entertainment 750Travel 2,000Meals 250Prof Dues and Subs 500


61

Problem 9 - 52Automobile $2,500Moving Expenses FOR 4,000Entertainment 750Travel 2,000Meals 250Prof Dues and Subs 500Total $10,750


62

Problem 9 - 52Automobile $2,500Moving Expenses FOREntertainment 750Travel 2,000Meals 250Prof Dues and Subs 500Total $6,000Less: 2% of $120,000 2,400Deduction $ 3,600

b. from; tier 2


64

who:cyndy harnett cyndy currently works at kelley services, a staffing company that specializes in...

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