Travel, Entertainment, Gift, Car Expenses & Business Use of Home Deduction

Many questions I receive from new clients are regarding deductibility of entertainment, travel, and business use of home. Here are some articles and links to IRS Publications that will help get your started. http://www.irs.gov/app/picklist/list/publicationsNoticesPdf.html and insert in the “Find” Box the Publication number you are searching for. I recommend Publication #334 “Tax Guide for Small Business”; #587 Business Use of your Home; and #463 Travel, Entertainment, Gift, and Car Expenses.

Disclaimer: This post does not constitute tax advice or financial planning advice (articles may be outdated). Please consult with your professional accountant or professional financial planner.

Importance of Recordkeeping:
http://www.unclefed.com/AuthorsRow/GretaHicks/problems.html - I like this article because it emphasizes the importance of good record keeping. Specifically, she states “The IRS presumes all assets and deductions are personal unless the taxpayer has the records to prove otherwise.”


Pub 463: Travel, Entertainment, Gift and Car Expenses:

http://www.irs.gov/pub/irs-pdf/p463.pdf

A few pages from Pub 463 I wish to highlight:

Pg 10 and Pg 11 – See Table 2-1 “When are Entertainment Expenses Deductible” and Figure A “Does the 50% Limit Apply to Your Expenses”

Pg 13 – See “What Entertainment Expenses are (generally) not Deductible.

Pg 25 – See Recordkeeping requirements.

A few articles that may interest you:

http://ezinearticles.com/?Small-Business-Deductions---How-to-Drive-the-IRS-Crazy&id=135944 - An article regarding the Vehicle deduction

http://www.yousaveontaxes.com/tax-tidbit-3.html - An article regarding use of the Per Diem method – there are other “tax tidbit” articles included here that may be of interested to you.


Pub 587: Business Use of Your Home:

http://www.unclefed.com/Tax-Help/irs-tt/tc509.html - An article written about claiming the Business Use of Home deduction.

Here is the Link to Publication # 587 Business Use of Home
http://www.irs.gov/pub/irs-pdf/p587.pdf


A few pages from Pub 587 I wish to highlight:

Pg 4 figure A – Use this diagram to see if you qualify to claim the business use of your home deduction.

Pg 7 – See how a typical deduction is calculated. This will help you start gathering the information needed to calculate your deduction.

Pg 14 and 15 – This describes how you may be required to recapture prior business use of home deduction (depreciation related deductions) when you sale your home.

DISCLAIMER: Information provided is not intended for use as accounting, tax, or legal advice; rather, consult with a professional.

IRS Circular 230 requires that we inform you that the advice contained herein is not intended to be used, and it cannot be used, for the purpose of avoiding penalties that may be imposed by the IRS.