Tax Lec 8

Reasonability Requirement

• says that expenses in excess of a reasonable amount cannot be deducted

• e.g., if a salary in excess of a reasonable amount is paid (e.g., to a family member), the excess amount is not deductible

Meals and Entertainment Rule

Exceptions to the M&E Rule

Interest on bank loan used to purchase an invesetment or used to finance business operations

•   is deductible for accounting and for tax purposes but interest paid on late-paid income taxes is not deductible

Cost incurred to dispute tax assesment and Prepaid expenses

Bad debt allowances and write offs of AR

Landscaping and site investigation

Landscaping and Site investigation paid in the year is deductible for tax purposes.

Capital Items

Convention Expenses

Charitable Donations

Life Insurance Premiums