Gary J Wood, P C, CPA-Article for Arizona Journal of Real Estate & Business, February, 1993
It's tax time! So, how are you doing? Remember the words of Alfred E Neuman, "It takes more brains and effort to figure the income tax than it does to make the income." In this article is some information that may help. Keep in mind, though, that what I write is general by its nature; it is not tax or legal advice and it is not intended to tell you how to prepare your own return.
Business ideas: Businesses which use the accrual basis can write off worthless business debts and take a full deduction for it. Up to $10,000 of the cost of newly purchased equipment placed "in service" during 1992 can be deducted immediately instead of depreciating it over a number of years. Reimbursements paid to employees for business expenses under an "accountable plan" are fully deductible by the business and not taxable to the employee. Business gifts for maintaining goodwill up to $25 per person are deductible. The standard mileage rate for 1992 is 28 cents.
A deduction for an office-in-home may no longer available for taxpayers who use it only for "office" or administrative functions, based on a recent Supreme Court ruling. It may not be considered your principal place of business if you do not use it to actually provide your services or do not regularly meet patients, clients, or customers there.
Remember, no one gets a deduction simply for being generous; tax deductions are available for donations to charities, not the to needy. Incidentally, the IRS says donors can ignore value of insubstantial benefits received.
If no one rents your property, you can still deduct all of the expenses, even though you don't have a tenant. The Tax Court's position is that if you tried to make a profit, you can deduct the loss.
If you sign a joint return, you are responsible for everything on that return jointly with your spouse, whether it was yours or not. Which has been known to become very important years later, particularly after a divorce.
If your income is below the amounts required for filing, the IRS (not me) wants you to not file. It has to do with reducing their paperwork. However, since the statute of limitations for that return doesn't starts to run until the return is filed, be sure of your numbers, or you could be in for a very unpleasant surprise in the (possibly distant) future.
Gary J Wood, P C, CPA has been solving tax and accounting problems for individuals and owners of closely-held businesses in the Valley area for more than a decade. Information contained in this article is general by its nature and should not be construed to be tax or legal advice.
If you would like specific advice for your situation,
please call (602) 956-1774 and arrange an appointment.
A copy of his newsletter, Schedule FYI, is available on the Internet at or by sending a SASE to
P O Box 32815, Phoenix, AZ 85064.
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