Neutral cost recovery system boosts depreciation benefits
Article Abstract:
The tax bill passed by the US House of Representatives in 1995 includes provision that would allow businesses to use a new depreciation method, the Neutral Cost Recovery System. Taxpayers electing this method would use the existing Modified Accelerated Cost Recovery System with the 150 percent declining-balance method and then adjust depreciation allowance amounts for inflation under the new method. Despite the fact that the new method may allow for depreciation in excess of purchase price, many business groups are opposed to the proposal's additional complexity. Federal revenues would suffer in the long term as well.
Publication Name: Taxes: The Tax Magazine
Subject: Business
ISSN: 0040-0181
Year: 1995
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Transportation expense deduction limited for home-officed taxpayers
Article Abstract:
The IRS has ruled in Revenue Ruling 94-47 that taxpayers commuting between their residence and a work site will not be able to deduct the expenses of commuting unless the residence qualifies as the taxpayer's principal place of business under IRC section 280A. When this ruling is analyzing in light of the restrictive definition of a qualifying home office from Soliman v. Commissioner, it becomes evident that the commuting expense deduction will become difficult to claim. Transportation expenses between non-residence job locations continue to be deductible and are not affected by the ruling.
Publication Name: Taxes: The Tax Magazine
Subject: Business
ISSN: 0040-0181
Year: 1995
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Reasonable compensation in recent Tax Court cases
Article Abstract:
Rulings on the reasonableness of compensation paid to a shareholder-employee of a closely held corporation are necessarily fact-based, making planning difficult, but six Tax Court rulings in early 1995 should shed some light on the factors to consider. In the six cases, taxpayers reaped three partial victories and three complete victories. The court considered factors including compensation paid to employees at comparable companies, the return on equity for the employee, the nature and timing of the compensation decision and the company's salary policies.
Publication Name: Taxes: The Tax Magazine
Subject: Business
ISSN: 0040-0181
Year: 1995
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