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State Tax Form 2013

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State Tax Form 2013

State tax form 2013 Publication 544 - Introductory Material Table of Contents Future Developments What's New Important Reminders IntroductionOrdering forms and publications. State tax form 2013 Tax questions. State tax form 2013 Future Developments For the latest information about developments related to Publication 544, such as legislation enacted after it was published, go to www. State tax form 2013 irs. State tax form 2013 gov/pub544. State tax form 2013 What's New Direct reporting on Schedule D. State tax form 2013   For 2013, certain transactions may be combined and the totals reported directly on Schedule D. State tax form 2013 If you choose to do that, you do not need to include these transactions on Form 8949, Sales and Other Dispositions of Capital Assets. State tax form 2013 For additional information, see Schedule D and Form 8949 in chapter 4. State tax form 2013 Tax rate on net capital gain and qualified dividends. State tax form 2013   The maximum tax rate of 15% on net capital gain and qualified dividends has increased to 20% for some taxpayers. State tax form 2013 See Capital Gains Tax Rates in chapter 4. State tax form 2013 Important Reminders Dispositions of U. State tax form 2013 S. State tax form 2013 real property interests by foreign persons. State tax form 2013  If you are a foreign person or firm and you sell or otherwise dispose of a U. State tax form 2013 S. State tax form 2013 real property interest, the buyer (or other transferee) may have to withhold income tax on the amount you receive for the property (including cash, the fair market value of other property, and any assumed liability). State tax form 2013 Corporations, partnerships, trusts, and estates also may have to withhold on certain U. State tax form 2013 S. State tax form 2013 real property interests they distribute to you. State tax form 2013 You must report these dispositions and distributions and any income tax withheld on your U. State tax form 2013 S. State tax form 2013 income tax return. State tax form 2013 For more information on dispositions of U. State tax form 2013 S. State tax form 2013 real property interests, see Publication 519, U. State tax form 2013 S. State tax form 2013 Tax Guide for Aliens. State tax form 2013 Also see Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities. State tax form 2013 Foreign source income. State tax form 2013  If you are a U. State tax form 2013 S. State tax form 2013 citizen with income from dispositions of property outside the United States (foreign income), you must report all such income on your tax return unless it is exempt from U. State tax form 2013 S. State tax form 2013 law. State tax form 2013 This is true whether you reside inside or outside the United States and whether or not you receive a Form 1099 from the foreign payor. State tax form 2013 Photographs of missing children. State tax form 2013  The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. State tax form 2013 Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. State tax form 2013 You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child. State tax form 2013 Introduction You dispose of property when any of the following occurs. State tax form 2013 You sell property. State tax form 2013 You exchange property for other property. State tax form 2013 Your property is condemned or disposed of under threat of condemnation. State tax form 2013 Your property is repossessed. State tax form 2013 You abandon property. State tax form 2013 You give property away. State tax form 2013 This publication explains the tax rules that apply when you dispose of property. State tax form 2013 It discusses the following topics. State tax form 2013 How to figure a gain or loss. State tax form 2013 Whether your gain or loss is ordinary or capital. State tax form 2013 How to treat your gain or loss when you dispose of business property. State tax form 2013 How to report a gain or loss. State tax form 2013 This publication also explains whether your gain is taxable or your loss is deductible. State tax form 2013 This publication does not discuss certain transactions covered in other IRS publications. State tax form 2013 These include the following. State tax form 2013 Most transactions involving stocks, bonds, options, forward and futures contracts, and similar investments. State tax form 2013 See chapter 4 of Publication 550, Investment Income and Expenses. State tax form 2013 Sale of your main home. State tax form 2013 See Publication 523, Selling Your Home. State tax form 2013 Installment sales. State tax form 2013 See Publication 537, Installment Sales. State tax form 2013 Transfers of property at death. State tax form 2013 See Publication 559, Survivors, Executors, and Administrators. State tax form 2013 Forms to file. State tax form 2013   When you dispose of property, you usually will have to file one or more of the following forms. State tax form 2013 Schedule D, Capital Gains and Losses. State tax form 2013 Form 4797, Sales of Business Property. State tax form 2013 Form 8824, Like-Kind Exchanges. State tax form 2013 Form 8949, Sales and Other Dispositions of Capital Assets. State tax form 2013    Although the discussions in this publication may at times refer mainly to individuals, many of the rules discussed also apply to taxpayers other than individuals. State tax form 2013 However, the rules for property held for personal use usually will not apply to taxpayers other than individuals. State tax form 2013 Comments and suggestions. State tax form 2013   We welcome your comments about this publication and your suggestions for future editions. State tax form 2013   You can send your comments to the following address. State tax form 2013 Internal Revenue Service Tax Forms and Publications Division 1111 Constitution Ave. State tax form 2013 NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. State tax form 2013 Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. State tax form 2013 You can also send us comments from www. State tax form 2013 irs. State tax form 2013 gov/formspubs/. State tax form 2013 Click on “More Information ” and then on “Give us feedback. State tax form 2013 ” Although we cannot respond individually to each email, we do appreciate your feedback and will consider your comments as we revise our tax products. State tax form 2013 Ordering forms and publications. State tax form 2013   Visit www. State tax form 2013 irs. State tax form 2013 gov/formspubs/ to download forms and publications, call 1-800-TAX-FORM (1-800-829-3676), or write to the address below and receive a response within 10 days after your request is received. State tax form 2013 Internal Revenue Service 1201 N. State tax form 2013 Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. State tax form 2013   If you have a tax question, check the information available on IRS. State tax form 2013 gov or call 1-800-829-1040. State tax form 2013 We cannot answer tax questions sent to either of the above addresses. State tax form 2013 Prev  Up  Next   Home   More Online Publications
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The State Tax Form 2013

State tax form 2013 11. State tax form 2013   Other Expenses Table of Contents What's New Introduction Topics - This chapter discusses: Useful Items - You may want to see: Reimbursement of Travel, Meals, and EntertainmentReimbursements Miscellaneous ExpensesMeaning of generally enforced. State tax form 2013 Kickbacks. State tax form 2013 Form 1099-MISC. State tax form 2013 Exception. State tax form 2013 Tax preparation fees. State tax form 2013 Covered executive branch official. State tax form 2013 Exceptions to denial of deduction. State tax form 2013 Indirect political contributions. State tax form 2013 Type of deduction. State tax form 2013 Repayment—$3,000 or less. State tax form 2013 Repayment—over $3,000. State tax form 2013 Method 1. State tax form 2013 Method 2. State tax form 2013 Repayment does not apply. State tax form 2013 Year of deduction (or credit). State tax form 2013 Telephone. State tax form 2013 What's New Standard mileage rate. State tax form 2013  Beginning in 2013, the standard mileage rate for the cost of operating your car, van, pickup, or panel truck for business use is 56. State tax form 2013 5 cents per mile. State tax form 2013 For more information, see Car and truck expenses under Miscellaneous Expenses. State tax form 2013 Introduction This chapter covers business expenses that may not have been explained to you, as a business owner, in previous chapters of this publication. State tax form 2013 Topics - This chapter discusses: Travel, meals, and entertainment Bribes and kickbacks Charitable contributions Education expenses Lobbying expenses Penalties and fines Repayments (claim of right) Other miscellaneous expenses Useful Items - You may want to see: Publication 15-B Employer's Tax Guide to Fringe Benefits 463 Travel, Entertainment, Gift, and Car Expenses 526 Charitable Contributions 529 Miscellaneous Deductions 544 Sales and Other Dispositions of Assets 970 Tax Benefits for Education 1542 Per Diem Rates See chapter 12 for information about getting publications and forms. State tax form 2013 Reimbursement of Travel, Meals, and Entertainment The following discussion explains how to handle any reimbursements or allowances you may provide to your employees under a reimbursement or allowance arrangement for travel, meals, and entertainment expenses. State tax form 2013 If you are self-employed and report your income and expenses on Schedule C or C-EZ (Form 1040), see Publication 463. State tax form 2013 To be deductible for tax purposes, expenses incurred for travel, meals, and entertainment must be ordinary and necessary expenses incurred while carrying on your trade or business. State tax form 2013 Generally, you also must show that entertainment expenses (including meals) are directly related to, or associated with, the conduct of your trade or business. State tax form 2013 For more information on travel, meals, and entertainment, including deductibility, see Publication 463. State tax form 2013 Reimbursements A “reimbursement or allowance arrangement” provides for payment of advances, reimbursements, and allowances for travel, meals, and entertainment expenses incurred by your employees during the ordinary course of business. State tax form 2013 If the expenses are substantiated, you can deduct the allowable amount on your tax return. State tax form 2013 Because of differences between accounting methods and tax law, the amount you can deduct for tax purposes may not be the same as the amount you deduct on your business books and records. State tax form 2013 For example, you can deduct 100% of the cost of meals on your business books and records. State tax form 2013 However, only 50% of these costs are allowed by law as a tax deduction. State tax form 2013 How you deduct a business expense under a reimbursement or allowance arrangement depends on whether you have: An accountable plan, or A nonaccountable plan. State tax form 2013 If you reimburse these expenses under an accountable plan, deduct them as travel, meals, or entertainment expenses. State tax form 2013 If you reimburse these expenses under a nonaccountable plan, report the reimbursements as wages on Form W-2, Wage and Tax Statement, and deduct them as wages on the appropriate line of your tax return. State tax form 2013 If you make a single payment to your employees and it includes both wages and an expense reimbursement, you must specify the amount of the reimbursement and report it accordingly. State tax form 2013 See Table 11-1 , Reporting Reimbursements. State tax form 2013 Accountable Plans An accountable plan requires your employees to meet all of the following requirements. State tax form 2013 Each employee must: Have paid or incurred deductible expenses while performing services as your employee, Adequately account to you for these expenses within a reasonable period of time, and Return any excess reimbursement or allowance within a reasonable period of time. State tax form 2013 An arrangement under which you advance money to employees is treated as meeting (3) above only if the following requirements are also met. State tax form 2013 The advance is reasonably calculated not to exceed the amount of anticipated expenses. State tax form 2013 You make the advance within a reasonable period of time of your employee paying or incurring the expense. State tax form 2013 If any expenses reimbursed under this arrangement are not substantiated, or an excess reimbursement is not returned within a reasonable period of time by an employee, you cannot treat these expenses as reimbursed under an accountable plan. State tax form 2013 Instead, treat the reimbursed expenses as paid under a nonaccountable plan, discussed later. State tax form 2013 Adequate accounting. State tax form 2013   Your employees must adequately account to you for their travel, meals, and entertainment expenses. State tax form 2013 They must give you documentary evidence of their travel, mileage, and other employee business expenses. State tax form 2013 This evidence should include items such as receipts, along with either a statement of expenses, an account book, a day-planner, or similar record in which the employee entered each expense at or near the time the expense was incurred. State tax form 2013 Excess reimbursement or allowance. State tax form 2013   An excess reimbursement or allowance is any amount you pay to an employee that is more than the business-related expenses for which the employee adequately accounted. State tax form 2013 The employee must return any excess reimbursement or other expense allowance to you within a reasonable period of time. State tax form 2013 Reasonable period of time. State tax form 2013   A reasonable period of time depends on the facts and circumstances. State tax form 2013 Generally, actions that take place within the times specified in the following list will be treated as taking place within a reasonable period of time. State tax form 2013 You give an advance within 30 days of the time the employee pays or incurs the expense. State tax form 2013 Your employees adequately account for their expenses within 60 days after the expenses were paid or incurred. State tax form 2013 Your employees return any excess reimbursement within 120 days after the expenses were paid or incurred. State tax form 2013 You give a periodic statement (at least quarterly) to your employees that asks them to either return or adequately account for outstanding advances and they comply within 120 days of the date of the statement. State tax form 2013 How to deduct. State tax form 2013   You can claim a deduction for travel, meals, and entertainment expenses if you reimburse your employees for these expenses under an accountable plan. State tax form 2013 Generally, the amount you can deduct for meals and entertainment is subject to a 50% limit, discussed later. State tax form 2013 If you are a sole proprietor, or are filing as a single member limited liability company, deduct the travel reimbursement on line 24a and the deductible part of the meals and entertainment reimbursement on line 24b, Schedule C (Form 1040) or line 2, Schedule C-EZ (Form 1040). State tax form 2013   If you are filing an income tax return for a corporation, include the reimbursement on the Other deductions line of Form 1120, U. State tax form 2013 S. State tax form 2013 Corporation Income Tax Return. State tax form 2013 If you are filing any other business income tax return, such as a partnership or S corporation return, deduct the reimbursement on the appropriate line of the return as provided in the instructions for that return. State tax form 2013 Table 11-1. State tax form 2013 Reporting Reimbursements IF the type of reimbursement (or other expense allowance) arrangement is under THEN the employer reports on Form W-2 An accountable plan with: Actual expense reimbursement:  Adequate accounting made and excess returned No amount. State tax form 2013 Actual expense reimbursement:  Adequate accounting and return of excess both required but excess not returned The excess amount as wages in box 1. State tax form 2013 Per diem or mileage allowance up to the federal rate:  Adequate accounting made and excess returned No amount. State tax form 2013 Per diem or mileage allowance up to the federal rate:  Adequate accounting and return of excess both required but excess not returned The excess amount as wages in box 1. State tax form 2013 The amount up to the federal rate is reported only in box 12—it is not reported in box 1. State tax form 2013 Per diem or mileage allowance exceeds the federal rate:  Adequate accounting made up to the federal rate only and excess not returned The excess amount as wages in box 1. State tax form 2013 The amount up to the federal rate is reported only in box 12—it is not reported in box 1. State tax form 2013 A nonaccountable plan with: Either adequate accounting or return of excess, or both, not required by plan The entire amount as wages in box 1. State tax form 2013 No reimbursement plan The entire amount as wages in box 1. State tax form 2013 Per Diem and Car Allowances You can reimburse your employees under an accountable plan based on travel days, miles, or some other fixed allowance. State tax form 2013 In these cases, your employee is considered to have accounted to you for the amount of the expense that does not exceed the rates established by the federal government. State tax form 2013 Your employee must actually substantiate to you the other elements of the expense, such as time, place, and business purpose. State tax form 2013 Federal rate. State tax form 2013   The federal rate can be figured using any one of the following methods. State tax form 2013 For car expenses: The standard mileage rate. State tax form 2013 A fixed and variable rate (FAVR). State tax form 2013 For per diem amounts: The regular federal per diem rate. State tax form 2013 The standard meal allowance. State tax form 2013 The high-low rate. State tax form 2013 Car allowance. State tax form 2013   Your employee is considered to have accounted to you for car expenses that do not exceed the standard mileage rate. State tax form 2013 Beginning in 2013, the standard business mileage rate is 56. State tax form 2013 5 cents per mile. State tax form 2013   You can choose to reimburse your employees using a fixed and variable rate (FAVR) allowance. State tax form 2013 This is an allowance that includes a combination of payments covering fixed and variable costs, such as a cents-per-mile rate to cover your employees' variable operating costs (such as gas, oil, etc. State tax form 2013 ) plus a flat amount to cover your employees' fixed costs (such as depreciation, insurance, etc. State tax form 2013 ). State tax form 2013 For information on using a FAVR allowance, see Revenue Procedure 2010-51, available at www. State tax form 2013 irs. State tax form 2013 gov/irb/2010-51_IRB/ar14. State tax form 2013 html and Notice 2012-72, available at www. State tax form 2013 irs. State tax form 2013 gov/irb/2012-50_IRB/ar10. State tax form 2013 html. State tax form 2013 Per diem allowance. State tax form 2013   If your employee actually substantiates to you the other elements (discussed earlier) of the expenses reimbursed using the per diem allowance, how you report and deduct the allowance depends on whether the allowance is for lodging and meal expenses or for meal expenses only and whether the allowance is more than the federal rate. State tax form 2013 Regular federal per diem rate. State tax form 2013   The regular federal per diem rate is the highest amount the federal government will pay to its employees while away from home on travel. State tax form 2013 It has two components: Lodging expense, and Meal and incidental expense (M&IE). State tax form 2013 The rates are different for different locations. State tax form 2013 Publication 1542 lists the rates in the continental United States. State tax form 2013 Standard meal allowance. State tax form 2013   The federal rate for meal and incidental expenses (M&IE) is the standard meal allowance. State tax form 2013 You can pay only an M&IE allowance to employees who travel away from home if: You pay the employee for actual expenses for lodging based on receipts submitted to you, You provide for the lodging, You pay for the actual expense of the lodging directly to the provider, You do not have a reasonable belief that lodging expenses were incurred by the employee, or The allowance is computed on a basis similar to that used in computing the employee's wages (that is, number of hours worked or miles traveled). State tax form 2013 Internet access. State tax form 2013    Per diem rates are available on the Internet. State tax form 2013 You can access per diem rates at www. State tax form 2013 gsa. State tax form 2013 gov/perdiemrates. State tax form 2013 High-low method. State tax form 2013   This is a simplified method of computing the federal per diem rate for travel within the continental United States. State tax form 2013 It eliminates the need to keep a current list of the per diem rate for each city. State tax form 2013   Under the high-low method, the per diem amount for travel during January through September of 2013 is $242 ($65 for M&IE) for certain high-cost locations. State tax form 2013 All other areas have a per diem amount of $163 ($52 for M&IE). State tax form 2013 The high-cost locations eligible for the higher per diem amount under the high-low method are listed in Publication 1542. State tax form 2013   Effective October 1, 2013, the per diem rate for high-cost locations increased to $251 ($65 for M&IE). State tax form 2013 The rate for all other locations increased to $170 ($52 for M&IE). State tax form 2013 For October, November, and December 2013, you can either continue to use the rates described in the preceding paragraph or change to the new rates. State tax form 2013 However, you must use the same rate for all employees reimbursed under the high-low method. State tax form 2013   For more information about the high-low method, see Notice 2013-65, available at www. State tax form 2013 irs. State tax form 2013 gov/irb/2013-44_IRB/ar13. State tax form 2013 html. State tax form 2013 See Publication 1542 (available on the Internet at IRS. State tax form 2013 gov) for the current per diem rates for all locations. State tax form 2013 Reporting per diem and car allowances. State tax form 2013   The following discussion explains how to report per diem and car allowances. State tax form 2013 The manner in which you report them depends on how the allowance compares to the federal rate. State tax form 2013 See Table 11-1. State tax form 2013 Allowance less than or equal to the federal rate. State tax form 2013   If your allowance for the employee is less than or equal to the appropriate federal rate, that allowance is not included as part of the employee's pay in box 1 of the employee's Form W-2. State tax form 2013 Deduct the allowance as travel expenses (including meals that may be subject to the 50% limit, discussed later). State tax form 2013 See How to deduct under Accountable Plans, earlier. State tax form 2013 Allowance more than the federal rate. State tax form 2013   If your employee's allowance is more than the appropriate federal rate, you must report the allowance as two separate items. State tax form 2013   Include the allowance amount up to the federal rate in box 12 (code L) of the employee's Form W-2. State tax form 2013 Deduct it as travel expenses (as explained above). State tax form 2013 This part of the allowance is treated as reimbursed under an accountable plan. State tax form 2013   Include the amount that is more than the federal rate in box 1 (and in boxes 3 and 5 if they apply) of the employee's Form W-2. State tax form 2013 Deduct it as wages subject to income tax withholding, social security, Medicare, and federal unemployment taxes. State tax form 2013 This part of the allowance is treated as reimbursed under a nonaccountable plan as explained later under Nonaccountable Plans. State tax form 2013 Meals and Entertainment Under an accountable plan, you can generally deduct only 50% of any otherwise deductible business-related meal and entertainment expenses you reimburse your employees. State tax form 2013 The deduction limit applies even if you reimburse them for 100% of the expenses. State tax form 2013 Application of the 50% limit. State tax form 2013   The 50% deduction limit applies to reimbursements you make to your employees for expenses they incur for meals while traveling away from home on business and for entertaining business customers at your place of business, a restaurant, or another location. State tax form 2013 It applies to expenses incurred at a business convention or reception, business meeting, or business luncheon at a club. State tax form 2013 The deduction limit may also apply to meals you furnish on your premises to your employees. State tax form 2013 Related expenses. State tax form 2013   Taxes and tips relating to a meal or entertainment activity you reimburse to your employee under an accountable plan are included in the amount subject to the 50% limit. State tax form 2013 Reimbursements you make for expenses, such as cover charges for admission to a nightclub, rent paid for a room to hold a dinner or cocktail party, or the amount you pay for parking at a sports arena, are all subject to the 50% limit. State tax form 2013 However, the cost of transportation to and from an otherwise allowable business meal or a business-related entertainment activity is not subject to the 50% limit. State tax form 2013 Amount subject to 50% limit. State tax form 2013   If you provide your employees with a per diem allowance only for meal and incidental expenses, the amount treated as an expense for food and beverages is the lesser of the following. State tax form 2013 The per diem allowance. State tax form 2013 The federal rate for M&IE. State tax form 2013   If you provide your employees with a per diem allowance that covers lodging, meals, and incidental expenses, you must treat an amount equal to the federal M&IE rate for the area of travel as an expense for food and beverages. State tax form 2013 If the per diem allowance you provide is less than the federal per diem rate for the area of travel, you can treat 40% of the per diem allowance as the amount for food and beverages. State tax form 2013 Meal expenses when subject to “hours of service” limits. State tax form 2013   You can deduct 80% of the cost of reimbursed meals your employees consume while away from their tax home on business during, or incident to, any period subject to the Department of Transportation's “hours of service” limits. State tax form 2013   See Publication 463 for a detailed discussion of individuals subject to the Department of Transportation's “hours of service” limits. State tax form 2013 De minimis (minimal) fringe benefit. State tax form 2013   The 50% limit does not apply to an expense for food or beverage that is excluded from the gross income of an employee because it is a de minimis fringe benefit. State tax form 2013 See Publication 15-B for additional information on de minimis fringe benefits. State tax form 2013 Company cafeteria or executive dining room. State tax form 2013   The cost of food and beverages you provide primarily to your employees on your business premises is deductible. State tax form 2013 This includes the cost of maintaining the facilities for providing the food and beverages. State tax form 2013 These expenses are subject to the 50% limit unless they qualify as a de minimis fringe benefit, as just discussed, or unless they are compensation to your employees (explained later). State tax form 2013 Employee activities. State tax form 2013   The expense of providing recreational, social, or similar activities (including the use of a facility) for your employees is deductible and is not subject to the 50% limit. State tax form 2013 The benefit must be primarily for your employees who are not highly compensated. State tax form 2013   For this purpose, a highly compensated employee is an employee who meets either of the following requirements. State tax form 2013 Owned a 10% or more interest in the business during the year or the preceding year. State tax form 2013 An employee is treated as owning any interest owned by his or her brother, sister, spouse, ancestors, and lineal descendants. State tax form 2013 Received more than $115,000 in pay for the preceding year. State tax form 2013 You can choose to include only employees who were also in the top 20% of employees when ranked by pay for the preceding year. State tax form 2013   For example, the expenses for food, beverages, and entertainment for a company-wide picnic are not subject to the 50% limit. State tax form 2013 Meals or entertainment treated as compensation. State tax form 2013   The 50% limit does not apply to either of the following. State tax form 2013 Expenses for meals or entertainment that you treat as: Compensation to an employee who was the recipient of the meals or entertainment, and Wages subject to withholding of federal income tax. State tax form 2013 Expenses for meals or entertainment if: A recipient of the meals or entertainment who is not your employee has to include the expenses in gross income as compensation for services or as a prize or award, and You include that amount on a Form 1099 issued to the recipient, if a Form 1099 is required. State tax form 2013 Sales of meals or entertainment. State tax form 2013   You can deduct the cost of meals or entertainment (including the use of facilities) you sell to the public. State tax form 2013 For example, if you run a nightclub, your expense for the entertainment you furnish to your customers, such as a floor show, is a business expense that is fully deductible. State tax form 2013 The 50% limit does not apply to this expense. State tax form 2013 Providing meals or entertainment to general public to promote goodwill. State tax form 2013   You can deduct the cost of providing meals, entertainment, or recreational facilities to the general public as a means of advertising or promoting goodwill in the community. State tax form 2013 The 50% limit does not apply to this expense. State tax form 2013 Director, stockholder, or employee meetings. State tax form 2013   You can deduct entertainment expenses directly related to business meetings of your employees, partners, stockholders, agents, or directors. State tax form 2013 You can provide some minor social activities, but the main purpose of the meeting must be your company's business. State tax form 2013 These expenses are subject to the 50% limit. State tax form 2013 Trade association meetings. State tax form 2013   You can deduct expenses directly related to and necessary for attending business meetings or conventions of certain tax-exempt organizations. State tax form 2013 These organizations include business leagues, chambers of commerce, real estate boards, and trade and professional associations. State tax form 2013 Nonaccountable Plans A nonaccountable plan is an arrangement that does not meet the requirements for an accountable plan. State tax form 2013 All amounts paid, or treated as paid, under a nonaccountable plan are reported as wages on Form W-2. State tax form 2013 The payments are subject to income tax withholding, social security, Medicare, and federal unemployment taxes. State tax form 2013 You can deduct the reimbursement as compensation or wages only to the extent it meets the deductibility tests for employees' pay in chapter 2. State tax form 2013 Deduct the allowable amount as compensation or wages on the appropriate line of your income tax return, as provided in its instructions. State tax form 2013 Miscellaneous Expenses In addition to travel, meal, and entertainment expenses, there are other expenses you can deduct. State tax form 2013 Advertising expenses. State tax form 2013   You generally can deduct reasonable advertising expenses that are directly related to your business activities. State tax form 2013 Generally, you cannot deduct amounts paid to influence legislation (i. State tax form 2013 e. State tax form 2013 , lobbying). State tax form 2013 See Lobbying expenses , later. State tax form 2013   You can usually deduct as a business expense the cost of institutional or goodwill advertising to keep your name before the public if it relates to business you reasonably expect to gain in the future. State tax form 2013 For example, the cost of advertising that encourages people to contribute to the Red Cross, to buy U. State tax form 2013 S. State tax form 2013 Savings Bonds, or to participate in similar causes is usually deductible. State tax form 2013 Anticipated liabilities. State tax form 2013   Anticipated liabilities or reserves for anticipated liabilities are not deductible. State tax form 2013 For example, assume you sold 1-year TV service contracts this year totaling $50,000. State tax form 2013 From experience, you know you will have expenses of about $15,000 in the coming year for these contracts. State tax form 2013 You cannot deduct any of the $15,000 this year by charging expenses to a reserve or liability account. State tax form 2013 You can deduct your expenses only when you actually pay or accrue them, depending on your accounting method. State tax form 2013 Bribes and kickbacks. State tax form 2013   Engaging in the payment of bribes or kickbacks is a serious criminal matter. State tax form 2013 Such activity could result in criminal prosecution. State tax form 2013 Any payments that appear to have been made, either directly or indirectly, to an official or employee of any government or an agency or instrumentality of any government are not deductible for tax purposes and are in violation of the law. State tax form 2013   Payments paid directly or indirectly to a person in violation of any federal or state law (but only if that state law is generally enforced, defined below) that provides for a criminal penalty or for the loss of a license or privilege to engage in a trade or business are also not allowed as a deduction for tax purposes. State tax form 2013 Meaning of “generally enforced. State tax form 2013 ”   A state law is considered generally enforced unless it is never enforced or enforced only for infamous persons or persons whose violations are extraordinarily flagrant. State tax form 2013 For example, a state law is generally enforced unless proper reporting of a violation of the law results in enforcement only under unusual circumstances. State tax form 2013 Kickbacks. State tax form 2013   A kickback is a payment for referring a client, patient, or customer. State tax form 2013 The common kickback situation occurs when money or property is given to someone as payment for influencing a third party to purchase from, use the services of, or otherwise deal with the person who pays the kickback. State tax form 2013 In many cases, the person whose business is being sought or enjoyed by the person who pays the kickback is not aware of the payment. State tax form 2013   For example, the Yard Corporation is in the business of repairing ships. State tax form 2013 It returns 10% of the repair bills as kickbacks to the captains and chief officers of the vessels it repairs. State tax form 2013 Although this practice is considered an ordinary and necessary expense of getting business, it is clearly a violation of a state law that is generally enforced. State tax form 2013 These expenditures are not deductible for tax purposes, whether or not the owners of the shipyard are subsequently prosecuted. State tax form 2013 Form 1099-MISC. State tax form 2013   It does not matter whether any kickbacks paid during the tax year are deductible on your income tax return in regards to information reporting. State tax form 2013 See Form 1099-MISC for more information. State tax form 2013 Car and truck expenses. State tax form 2013   The costs of operating a car, truck, or other vehicle in your business are deductible. State tax form 2013 For more information on how to figure your deduction, see Publication 463. State tax form 2013 Charitable contributions. State tax form 2013   Cash payments to an organization, charitable or otherwise, may be deductible as business expenses if the payments are not charitable contributions or gifts and are directly related to your business. State tax form 2013 If the payments are charitable contributions or gifts, you cannot deduct them as business expenses. State tax form 2013 However, corporations (other than S corporations) can deduct charitable contributions on their income tax returns, subject to limitations. State tax form 2013 See the Instructions for Form 1120 for more information. State tax form 2013 Sole proprietors, partners in a partnership, or shareholders in an S corporation may be able to deduct charitable contributions made by their business on Schedule A (Form 1040). State tax form 2013 Example. State tax form 2013 You paid $15 to a local church for a half-page ad in a program for a concert it is sponsoring. State tax form 2013 The purpose of the ad was to encourage readers to buy your products. State tax form 2013 Your payment is not a charitable contribution. State tax form 2013 You can deduct it as an advertising expense. State tax form 2013 Example. State tax form 2013 You made a $100,000 donation to a committee organized by the local Chamber of Commerce to bring a convention to your city, intended to increase business activity, including yours. State tax form 2013 Your payment is not a charitable contribution. State tax form 2013 You can deduct it as a business expense. State tax form 2013 See Publication 526 for a discussion of donated inventory, including capital gain property. State tax form 2013 Club dues and membership fees. State tax form 2013   Generally, you cannot deduct amounts paid or incurred for membership in any club organized for business, pleasure, recreation, or any other social purpose. State tax form 2013 This includes country clubs, golf and athletic clubs, hotel clubs, sporting clubs, airline clubs, and clubs operated to provide meals under circumstances generally considered to be conducive to business discussions. State tax form 2013 Exception. State tax form 2013   The following organizations are not treated as clubs organized for business, pleasure, recreation, or other social purpose unless one of the main purposes is to conduct entertainment activities for members or their guests or to provide members or their guests with access to entertainment facilities. State tax form 2013 Boards of trade. State tax form 2013 Business leagues. State tax form 2013 Chambers of commerce. State tax form 2013 Civic or public service organizations. State tax form 2013 Professional organizations such as bar associations and medical associations. State tax form 2013 Real estate boards. State tax form 2013 Trade associations. State tax form 2013 Credit card convenience fees. State tax form 2013   Credit card companies charge a fee to businesses who accept their cards. State tax form 2013 This fee when paid or incurred by the business can be deducted as a business expense. State tax form 2013 Damages recovered. State tax form 2013   Special rules apply to compensation you receive for damages sustained as a result of patent infringement, breach of contract or fiduciary duty, or antitrust violations. State tax form 2013 You must include this compensation in your income. State tax form 2013 However, you may be able to take a special deduction. State tax form 2013 The deduction applies only to amounts recovered for actual economic injury, not any additional amount. State tax form 2013 The deduction is the smaller of the following. State tax form 2013 The amount you received or accrued for damages in the tax year reduced by the amount you paid or incurred in the year to recover that amount. State tax form 2013 Your losses from the injury you have not deducted. State tax form 2013 Demolition expenses or losses. State tax form 2013   Amounts paid or incurred to demolish a structure are not deductible. State tax form 2013 These amounts are added to the basis of the land where the demolished structure was located. State tax form 2013 Any loss for the remaining undepreciated basis of a demolished structure would not be recognized until the property is disposed of. State tax form 2013 Education expenses. State tax form 2013   Ordinary and necessary expenses paid for the cost of the education and training of your employees are deductible. State tax form 2013 See Education Expenses in chapter 2. State tax form 2013   You can also deduct the cost of your own education (including certain related travel) related to your trade or business. State tax form 2013 You must be able to show the education maintains or improves skills required in your trade or business, or that it is required by law or regulations, for keeping your license to practice, status, or job. State tax form 2013 For example, an attorney can deduct the cost of attending Continuing Legal Education (CLE) classes that are required by the state bar association to maintain his or her license to practice law. State tax form 2013   Education expenses you incur to meet the minimum requirements of your present trade or business, or those that qualify you for a new trade or business, are not deductible. State tax form 2013 This is true even if the education maintains or improves skills presently required in your business. State tax form 2013 For more information on education expenses, see Publication 970. State tax form 2013 Franchise, trademark, trade name. State tax form 2013   If you buy a franchise, trademark, or trade name, you can deduct the amount you pay or incur as a business expense only if your payments are part of a series of payments that are: Contingent on productivity, use, or disposition of the item, Payable at least annually for the entire term of the transfer agreement, and Substantially equal in amount (or payable under a fixed formula). State tax form 2013   When determining the term of the transfer agreement, include all renewal options and any other period for which you and the transferrer reasonably expect the agreement to be renewed. State tax form 2013   A franchise includes an agreement that gives one of the parties to the agreement the right to distribute, sell, or provide goods, services, or facilities within a specified area. State tax form 2013 Impairment-related expenses. State tax form 2013   If you are disabled, you can deduct expenses necessary for you to be able to work (impairment-related expenses) as a business expense, rather than as a medical expense. State tax form 2013   You are disabled if you have either of the following. State tax form 2013 A physical or mental disability (for example, blindness or deafness) that functionally limits your being employed. State tax form 2013 A physical or mental impairment that substantially limits one or more of your major life activities. State tax form 2013   The expense qualifies as a business expense if all the following apply. State tax form 2013 Your work clearly requires the expense for you to satisfactorily perform that work. State tax form 2013 The goods or services purchased are clearly not needed or used, other than incidentally, in your personal activities. State tax form 2013 Their treatment is not specifically provided for under other tax law provisions. State tax form 2013 Example. State tax form 2013 You are blind. State tax form 2013 You must use a reader to do your work, both at and away from your place of work. State tax form 2013 The reader's services are only for your work. State tax form 2013 You can deduct your expenses for the reader as a business expense. State tax form 2013 Internet-related expenses. State tax form 2013   Generally, you can deduct internet-related expenses including domain registrations fees and webmaster consulting costs. State tax form 2013 If you are starting a business you may have to amortize these expenses as start-up costs. State tax form 2013 For more information about amortizing start-up and organizational costs, see chapter 8. State tax form 2013 Interview expense allowances. State tax form 2013   Reimbursements you make to job candidates for transportation or other expenses related to interviews for possible employment are not wages. State tax form 2013 You can deduct the reimbursements as a business expense. State tax form 2013 However, expenses for food, beverages, and entertainment are subject to the 50% limit discussed earlier under Meals and Entertainment. State tax form 2013 Legal and professional fees. State tax form 2013   Fees charged by accountants and attorneys that are ordinary and necessary expenses directly related to operating your business are deductible as business expenses. State tax form 2013 However, usually legal fees you pay to acquire business assets are not deductible. State tax form 2013 These costs are added to the basis of the property. State tax form 2013   Fees that include payments for work of a personal nature (such as drafting a will, or damages arising from a personal injury) are not allowed as a business deduction on Schedule C or C-EZ. State tax form 2013 If the invoice includes both business and personal charges, compute the business portion as follows: multiply the total amount of the bill by a fraction, the numerator of which is the amount attributable to business matters, the denominator of which is the total amount paid. State tax form 2013 The result is the portion of the invoice attributable to business expenses. State tax form 2013 The portion attributable to personal matters is the difference between the total amount and the business portion (computed above). State tax form 2013   Legal fees relating to personal tax advice may be deductible on Schedule A (Form 1040), if you itemize deductions. State tax form 2013 However, the deduction is subject to the 2% limitation on miscellaneous itemized deductions. State tax form 2013 See Publication 529, Miscellaneous Deductions. State tax form 2013 Tax preparation fees. State tax form 2013   The cost of hiring a tax professional, such as a C. State tax form 2013 P. State tax form 2013 A. State tax form 2013 , to prepare that part of your tax return relating to your business as a sole proprietor is deductible on Schedule C or Schedule C-EZ. State tax form 2013 Any remaining cost may be deductible on Schedule A (Form 1040) if you itemize deductions. State tax form 2013   You can also claim a business deduction for amounts paid or incurred in resolving asserted tax deficiencies for your business operated as a sole proprietor. State tax form 2013 Licenses and regulatory fees. State tax form 2013   Licenses and regulatory fees for your trade or business paid annually to state or local governments generally are deductible. State tax form 2013 Some licenses and fees may have to be amortized. State tax form 2013 See chapter 8 for more information. State tax form 2013 Lobbying expenses. State tax form 2013   Generally, lobbying expenses are not deductible. State tax form 2013 Lobbying expenses include amounts paid or incurred for any of the following activities. State tax form 2013 Influencing legislation. State tax form 2013 Participating in or intervening in any political campaign for, or against, any candidate for public office. State tax form 2013 Attempting to influence the general public, or segments of the public, about elections, legislative matters, or referendums. State tax form 2013 Communicating directly with covered executive branch officials (defined later) in any attempt to influence the official actions or positions of those officials. State tax form 2013 Researching, preparing, planning, or coordinating any of the preceding activities. State tax form 2013   Your expenses for influencing legislation and communicating directly with a covered executive branch official include a portion of your labor costs and general and administrative costs of your business. State tax form 2013 For information on making this allocation, see section 1. State tax form 2013 162-28 of the regulations. State tax form 2013   You cannot claim a charitable or business expense deduction for amounts paid to an organization if both of the following apply. State tax form 2013 The organization conducts lobbying activities on matters of direct financial interest to your business. State tax form 2013 A principal purpose of your contribution is to avoid the rules discussed earlier that prohibit a business deduction for lobbying expenses. State tax form 2013   If a tax-exempt organization, other than a section 501(c)(3) organization, provides you with a notice on the part of dues that is allocable to nondeductible lobbying and political expenses, you cannot deduct that part of the dues. State tax form 2013 Covered executive branch official. State tax form 2013   For purposes of this discussion, a covered executive branch official is any of the following. State tax form 2013 The President. State tax form 2013 The Vice President. State tax form 2013 Any officer or employee of the White House Office of the Executive Office of the President and the two most senior level officers of each of the other agencies in the Executive Office. State tax form 2013 Any individual who: Is serving in a position in Level I of the Executive Schedule under section 5312 of title 5, United States Code, Has been designated by the President as having Cabinet-level status, or Is an immediate deputy of an individual listed in item (a) or (b). State tax form 2013 Exceptions to denial of deduction. State tax form 2013   The general denial of the deduction does not apply to the following. State tax form 2013 Expenses of appearing before, or communicating with, any committee or member of any local council or similar governing body concerning its legislation (local legislation) if the legislation is of direct interest to you or to you and an organization of which you are a member. State tax form 2013 An Indian tribal government is treated as a local council or similar governing body. State tax form 2013 Any in-house expenses for influencing legislation and communicating directly with a covered executive branch official if those expenses for the tax year do not exceed $2,000 (excluding overhead expenses). State tax form 2013 Expenses incurred by taxpayers engaged in the trade or business of lobbying (professional lobbyists) on behalf of another person (but does apply to payments by the other person to the lobbyist for lobbying activities). State tax form 2013 Moving machinery. State tax form 2013   Generally, the cost of moving machinery from one city to another is a deductible expense. State tax form 2013 So is the cost of moving machinery from one plant to another, or from one part of your plant to another. State tax form 2013 You can deduct the cost of installing the machinery in the new location. State tax form 2013 However, you must capitalize the costs of installing or moving newly purchased machinery. State tax form 2013 Outplacement services. State tax form 2013   The costs of outplacement services you provide to your employees to help them find new employment, such as career counseling, résumé assistance, skills assessment, etc. State tax form 2013 are deductible. State tax form 2013   The costs of outplacement services may cover more than one deduction category. State tax form 2013 For example, deduct as a utilities expense the cost of telephone calls made under this service and deduct as rental expense the cost of renting machinery and equipment for this service. State tax form 2013   For information on whether the value of outplacement services is includable in your employees' income, see Publication 15-B. State tax form 2013 Penalties and fines. State tax form 2013   Penalties paid for late performance or nonperformance of a contract are generally deductible. State tax form 2013 For instance, you own and operate a construction company. State tax form 2013 Under a contract, you are to finish construction of a building by a certain date. State tax form 2013 Due to construction delays, the building is not completed and ready for occupancy on the date stipulated in the contract. State tax form 2013 You are now required to pay an additional amount for each day that completion is delayed beyond the completion date stipulated in the contract. State tax form 2013 These additional costs are deductible business expenses. State tax form 2013   On the other hand, penalties or fines paid to any government agency or instrumentality because of a violation of any law are not deductible. State tax form 2013 These fines or penalties include the following amounts. State tax form 2013 Paid because of a conviction for a crime or after a plea of guilty or no contest in a criminal proceeding. State tax form 2013 Paid as a penalty imposed by federal, state, or local law in a civil action, including certain additions to tax and additional amounts and assessable penalties imposed by the Internal Revenue Code. State tax form 2013 Paid in settlement of actual or possible liability for a fine or penalty, whether civil or criminal. State tax form 2013 Forfeited as collateral posted for a proceeding that could result in a fine or penalty. State tax form 2013   Examples of nondeductible penalties and fines include the following. State tax form 2013 Fines for violating city housing codes. State tax form 2013 Fines paid by truckers for violating state maximum highway weight laws. State tax form 2013 Fines for violating air quality laws. State tax form 2013 Civil penalties for violating federal laws regarding mining safety standards and discharges into navigable waters. State tax form 2013   A fine or penalty does not include any of the following. State tax form 2013 Legal fees and related expenses to defend yourself in a prosecution or civil action for a violation of the law imposing the fine or civil penalty. State tax form 2013 Court costs or stenographic and printing charges. State tax form 2013 Compensatory damages paid to a government. State tax form 2013 Political contributions. State tax form 2013   Contributions or gifts paid to political parties or candidates are not deductible. State tax form 2013 In addition, expenses paid or incurred to take part in any political campaign of a candidate for public office are not deductible. State tax form 2013 Indirect political contributions. State tax form 2013   You cannot deduct indirect political contributions and costs of taking part in political activities as business expenses. State tax form 2013 Examples of nondeductible expenses include the following. State tax form 2013 Advertising in a convention program of a political party, or in any other publication if any of the proceeds from the publication are for, or intended for, the use of a political party or candidate. State tax form 2013 Admission to a dinner or program (including, but not limited to, galas, dances, film presentations, parties, and sporting events) if any of the proceeds from the function are for, or intended for, the use of a political party or candidate. State tax form 2013 Admission to an inaugural ball, gala, parade, concert, or similar event if identified with a political party or candidate. State tax form 2013 Repairs. State tax form 2013   The cost of repairing or improving property used in your trade or business is either a deductible or capital expense. State tax form 2013 Routine maintenance that keeps your property in a normal efficient operating condition, but that does not materially increase the value or substantially prolong the useful life of the property, is deductible in the year that it is incurred. State tax form 2013 Otherwise, the cost must be capitalized and depreciated. State tax form 2013 See Form 4562 and its instructions for how to compute and claim the depreciation deduction. State tax form 2013   The cost of repairs includes the costs of labor, supplies, and certain other items. State tax form 2013 The value of your own labor is not deductible. State tax form 2013 Examples of repairs include: Reconditioning floors (but not replacement), Repainting the interior and exterior walls of a building, Cleaning and repairing roofs and gutters, and Fixing plumbing leaks (but not replacement of fixtures). State tax form 2013 Repayments. State tax form 2013   If you had to repay an amount you included in your income in an earlier year, you may be able to deduct the amount repaid for the year in which you repaid it. State tax form 2013 Or, if the amount you repaid is more than $3,000, you may be able to take a credit against your tax for the year in which you repaid it. State tax form 2013 Type of deduction. State tax form 2013   The type of deduction you are allowed in the year of repayment depends on the type of income you included in the earlier year. State tax form 2013 For instance, if you repay an amount you previously reported as a capital gain, deduct the repayment as a capital loss on Form 8949. State tax form 2013 If you reported it as self-employment income, deduct it as a business deduction on Schedule C or Schedule C-EZ (Form 1040) or Schedule F (Form 1040). State tax form 2013   If you reported the amount as wages, unemployment compensation, or other nonbusiness ordinary income, enter it on Schedule A (Form 1040) as a miscellaneous itemized deduction that is subject to the 2% limitation. State tax form 2013 However, if the repayment is over $3,000 and Method 1 (discussed later) applies, deduct it on Schedule A (Form 1040) as a miscellaneous itemized deduction that is not subject to the 2% limitation. State tax form 2013 Repayment—$3,000 or less. State tax form 2013   If the amount you repaid was $3,000 or less, deduct it from your income in the year you repaid it. State tax form 2013 Repayment—over $3,000. State tax form 2013   If the amount you repaid was more than $3,000, you can deduct the repayment, as described earlier. State tax form 2013 However, you can instead choose to take a tax credit for the year of repayment if you included the income under a “claim of right. State tax form 2013 ” This means that at the time you included the income, it appeared that you had an unrestricted right to it. State tax form 2013 If you qualify for this choice, figure your tax under both methods and use the method that results in less tax. State tax form 2013 Method 1. State tax form 2013   Figure your tax for 2013 claiming a deduction for the repaid amount. State tax form 2013 Method 2. State tax form 2013   Figure your tax for 2013 claiming a credit for the repaid amount. State tax form 2013 Follow these steps. State tax form 2013 Figure your tax for 2013 without deducting the repaid amount. State tax form 2013 Refigure your tax from the earlier year without including in income the amount you repaid in 2013. State tax form 2013 Subtract the tax in (2) from the tax shown on your return for the earlier year. State tax form 2013 This is the amount of your credit. State tax form 2013 Subtract the answer in (3) from the tax for 2013 figured without the deduction (step 1). State tax form 2013   If Method 1 results in less tax, deduct the amount repaid as discussed earlier under Type of deduction. State tax form 2013   If Method 2 results in less tax, claim the credit on line 71 of Form 1040, and write “I. State tax form 2013 R. State tax form 2013 C. State tax form 2013 1341” next to line 71. State tax form 2013 Example. State tax form 2013 For 2012, you filed a return and reported your income on the cash method. State tax form 2013 In 2013, you repaid $5,000 included in your 2012 gross income under a claim of right. State tax form 2013 Your filing status in 2013 and 2012 is single. State tax form 2013 Your income and tax for both years are as follows:   2012  With Income 2012  Without Income Taxable Income $15,000 $10,000 Tax $ 1,819 $ 1,069   2013  Without Deduction 2013  With Deduction Taxable Income $49,950 $44,950 Tax $8,423 $7,173 Your tax under Method 1 is $7,173. State tax form 2013 Your tax under Method 2 is $7,673, figured as follows: Tax previously determined for 2012 $ 1,819 Less: Tax as refigured − 1,069 Decrease in 2012 tax $ 750 Regular tax liability for 2013 $8,423 Less: Decrease in 2012 tax − 750 Refigured tax for 2013 $ 7,673 Because you pay less tax under Method 1, you should take a deduction for the repayment in 2013. State tax form 2013 Repayment does not apply. State tax form 2013   This discussion does not apply to the following. State tax form 2013 Deductions for bad debts. State tax form 2013 Deductions from sales to customers, such as returns and allowances, and similar items. State tax form 2013 Deductions for legal and other expenses of contesting the repayment. State tax form 2013 Year of deduction (or credit). State tax form 2013   If you use the cash method of accounting, you can take the deduction (or credit, if applicable) for the tax year in which you actually make the repayment. State tax form 2013 If you use any other accounting method, you can deduct the repayment or claim a credit for it only for the tax year in which it is a proper deduction under your accounting method. State tax form 2013 For example, if you use the accrual method, you are entitled to the deduction or credit in the tax year in which the obligation for the repayment accrues. State tax form 2013 Subscriptions. State tax form 2013   Subscriptions to professional, technical, and trade journals that deal with your business field are deductible. State tax form 2013 Supplies and materials. State tax form 2013   Unless you have deducted the cost in any earlier year, you generally can deduct the cost of materials and supplies actually consumed and used during the tax year. State tax form 2013   If you keep incidental materials and supplies on hand, you can deduct the cost of the incidental materials and supplies you bought during the tax year if all the following requirements are met. State tax form 2013 You do not keep a record of when they are used. State tax form 2013 You do not take an inventory of the amount on hand at the beginning and end of the tax year. State tax form 2013 This method does not distort your income. State tax form 2013   You can also deduct the cost of books, professional instruments, equipment, etc. State tax form 2013 , if you normally use them within a year. State tax form 2013 However, if the usefulness of these items extends substantially beyond the year they are placed in service, you generally must recover their costs through depreciation. State tax form 2013 For more information regarding depreciation see Publication 946, How To Depreciate Property. State tax form 2013 Utilities. State tax form 2013   Business expenses for heat, lights, power, telephone service, and water and sewerage are deductible. State tax form 2013 However, any part due to personal use is not deductible. State tax form 2013 Telephone. State tax form 2013   You cannot deduct the cost of basic local telephone service (including any taxes) for the first telephone line you have in your home, even if you have an office in your home. State tax form 2013 However, charges for business long-distance phone calls on that line, as well as the cost of a second line into your home used exclusively for business, are deductible business expenses. State tax form 2013 Prev  Up  Next   Home   More Online Publications