Who:Cyndy Harnett Cyndy currently works at Kelley Services, a staffing company that specializes in...
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Transcript of 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
© Copyright 2001-2005 by M. Ray Gregg. All rights reserved.
4
Federal Income Tax
(Business) Deductions
© Copyright 2001-2005 by M. Ray Gregg. All rights reserved.
6
Gross Income- FOR= AGI- FROM= Taxable Income
Business
Personal
© Copyright 2001-2005 by M. Ray Gregg. All rights reserved.
7
General Requirements• Problem 6 – 9
– Ordinary
– Necessary
– Reasonable
© Copyright 2001-2005 by M. Ray Gregg. All rights reserved.
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
© Copyright 2001-2005 by M. Ray Gregg. All rights reserved.
11
The Four “Nots”
• Contrary to public policy
• Capital
• Personal
• Related to tax-exempt income
© Copyright 2001-2005 by M. Ray Gregg. All rights reserved.
12
The Four “Nots”• Problem 6 – 11
Why are expenses related to tax-exempt income disallowed?
• Income not included; expenses not deducted
© Copyright 2001-2005 by M. Ray Gregg. All rights reserved.
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
© Copyright 2001-2005 by M. Ray Gregg. All rights reserved.
15
Business Expenses
• Generally…
–Self-employed = “for”
–Employee = “from”
© Copyright 2001-2005 by M. Ray Gregg. All rights reserved.
16S
tep
1:
Th
eory
Ste
p 2
?
Ste
p 3
:P
ractic
e
© Copyright 2001-2005 by M. Ray Gregg. All rights reserved.
17
GI- FOR= AGI- FROM= TI
“Tier 1”
“Tier 2”
© Copyright 2001-2005 by M. Ray Gregg. All rights reserved.
19
Problem 6 - 13
a. Deductible? Yes For or from?
FROM – employEE
b. Two sources of income? Split:
Self-employed = FOR Employed = FROM
© Copyright 2001-2005 by M. Ray Gregg. All rights reserved.
20
GI- FOR= AGI- FROM= TI
“Tier 1”
“Tier 2”
© Copyright 2001-2005 by M. Ray Gregg. All rights reserved.
21
Tier 2 ExpensesReduced by2% of AGI
to determine deductible amount
© Copyright 2001-2005 by M. Ray Gregg. All rights reserved.
22
Most itemized deductionsare “Tier 1”
Refer to text page 7-36
© Copyright 2001-2005 by M. Ray Gregg. All rights reserved.
23
Refer to text page 7-36
Less 2%
“Tier 2”Expenses
Sub-total
© Copyright 2001-2005 by M. Ray Gregg. All rights reserved.
24
For vs. From• Problem 6 – 13
• Problem 6 – 33
© Copyright 2001-2005 by M. Ray Gregg. All rights reserved.
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
© Copyright 2001-2005 by M. Ray Gregg. All rights reserved.
26
GI- FOR= AGI- FROM= TI
“Tier 1”
“Tier 2”
© Copyright 2001-2005 by M. Ray Gregg. All rights reserved.
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
© Copyright 2001-2005 by M. Ray Gregg. All rights reserved.
28
Business Expenses
• Self-employed–“for”
• Employee–Reimbursed?
•Yes = “for”•No = “from”
© Copyright 2001-2005 by M. Ray Gregg. All rights reserved.
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…
© Copyright 2001-2005 by M. Ray Gregg. All rights reserved.
30
For vs. From• Problem 6 – 13
• Problem 6 – 33
© Copyright 2001-2005 by M. Ray Gregg. All rights reserved.
32
Chapter 9• Travel and Transportation• Automobile Expenses• Entertainment• Moving Expenses
• Education Expenses• Home Office• Reimbursements• Hobby losses (from Chap 6)
© Copyright 2001-2005 by M. Ray Gregg. All rights reserved.
33
Travel and Transportation
• Define travel
–“away from home overnight”
–Name some
© Copyright 2001-2005 by M. Ray Gregg. All rights reserved.
34
Travel and Transportation
• Define travel
–“away from home overnight”
–Name some
© Copyright 2001-2005 by M. Ray Gregg. All rights reserved.
35
Travel and Transportation
• Define travel
–“away from home overnight”
–Name some
• Define transportation
• Problem 9 -56
© Copyright 2001-2005 by M. Ray Gregg. All rights reserved.
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
© Copyright 2001-2005 by M. Ray Gregg. All rights reserved.
42
Airfare Deductible?
A B
CNever prorate airfare.
© Copyright 2001-2005 by M. Ray Gregg. All rights reserved.
43
Airfare Deductible?
A B
CPrimary reason?
© Copyright 2001-2005 by M. Ray Gregg. All rights reserved.
45
• Purely business expenses on a personal trip ARE deductible
• Purely personal expenses on a business trip are NOT deductible
© Copyright 2001-2005 by M. Ray Gregg. All rights reserved.
46
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
© Copyright 2001-2005 by M. Ray Gregg. All rights reserved.
47
Problem 9 - 56
Airfare $ 450 $450
Meals ($50 per day) 250
Hotel ($100 per day) 500
Entertainment 500
Total $1,700
assume he was NOT reimbursed
© Copyright 2001-2005 by M. Ray Gregg. All rights reserved.
48
Problem 9 - 56
Airfare $ 450 $450
Meals ($50 per day) x 3 250 $150
Hotel ($100 per day) 500
Entertainment 500
Total $1,700
assume he was NOT reimbursed
© Copyright 2001-2005 by M. Ray Gregg. All rights reserved.
49
Problem 9 - 56
Airfare $ 450 $450
Meals ($50 per day) x 3 250 $150
Hotel ($100 per day) 500
Entertainment 500
Total $1,700
assume he was NOT reimbursed
50% limit
© Copyright 2001-2005 by M. Ray Gregg. All rights reserved.
50
Problem 9 - 56
Airfare $ 450 $450
Meals ($50 per day) x 3 250 $ 75
Hotel ($100 per day) 500
Entertainment 500
Total $1,700
assume he was NOT reimbursed
© Copyright 2001-2005 by M. Ray Gregg. All rights reserved.
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
assume he was NOT reimbursed
© Copyright 2001-2005 by M. Ray Gregg. All rights reserved.
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
assume he was NOT reimbursed
50% limit
© Copyright 2001-2005 by M. Ray Gregg. All rights reserved.
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
assume he was NOT reimbursed
Deductible FROM – Tier 2
© Copyright 2001-2005 by M. Ray Gregg. All rights reserved.
54
Problem 9 - 56
Airfare $ 450
Meals ($50 per day) 250
Hotel ($100 per day) 500
Entertainment 500
Total $1,700
assume he WAS reimbursed
© Copyright 2001-2005 by M. Ray Gregg. All rights reserved.
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
assume he WAS reimbursed
a. none deductible by Mike
© Copyright 2001-2005 by M. Ray Gregg. All rights reserved.
56
Problem 9 - 56
Airfare $ 450 0
Meals ($50 per day) 250 0
Hotel ($100 per day) 500 0
Entertainment 500 0
Total $1,700
assume he WAS reimbursed
b. reimb not reported by Mike
© Copyright 2001-2005 by M. Ray Gregg. All rights reserved.
57
Problem 9 - 56
Airfare $ 450 450
Meals ($50 per day) 250 75
Hotel ($100 per day) 500 300
Entertainment 500 250
Total $1,700
assume he WAS reimbursed
c. all deductible by employer
© Copyright 2001-2005 by M. Ray Gregg. All rights reserved.
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?
© Copyright 2001-2005 by M. Ray Gregg. All rights reserved.
59
Problem 9 - 52Automobile $2,500Moving Expenses 4,000Entertainment 750Travel 2,000Meals 500Prof Dues and Subs 500
© Copyright 2001-2005 by M. Ray Gregg. All rights reserved.
60
Problem 9 - 52Automobile $2,500Moving Expenses 4,000Entertainment 750Travel 2,000Meals 250Prof Dues and Subs 500
© Copyright 2001-2005 by M. Ray Gregg. All rights reserved.
61
Problem 9 - 52Automobile $2,500Moving Expenses FOR 4,000Entertainment 750Travel 2,000Meals 250Prof Dues and Subs 500Total $10,750
© Copyright 2001-2005 by M. Ray Gregg. All rights reserved.
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