tax deduction

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Related to Deductible expense: Out of Pocket Expense

Tax deduction

An expense that a taxpayer is allowed to deduct from taxable income.

Deduction

An amount of money that one may subtract from one's gross annual income when calculating one's income tax liability. A common misconception about tax deductions is that they represent a dollar-for-dollar reduction of one's tax liability. Rather, a deduction removes a certain dollar amount from the income the IRS uses to calculate the percentage of one's income that is owed in taxes. Common deductions are charitable contributions, business expenses, and interest on mortgages. See also: Tax credit.

tax deduction

See deduction.

tax deduction

An expense allowed as a reduction of taxable income.The most common individual deductions are for home mortgage interest,ad valorem and sales taxes,moving expenses associated with a job, charitable giving, and health-care costs. Virtually all expenses associated with income-producing property are deductible, including noncash expenses such as depreciation. Virtually all operating expenses for a business are deductible, except that capital expenditures (a new roof, expansion of building, purchase of equipment) must be capitalized and depreciated over time unless falling within the Section 179 limits. Section 179 lets a taxpayer deduct as expenses certain things that would otherwise have to be capitalized.

References in periodicals archive ?
Staff entertaining is a deductible expense for your company, however there is potentially an income tax charge on the employee, where the cost per head exceeds pounds 150, and the party is not available to all employees.
Push taxable income into future periods and pull deductible expenses into the current year.
By transferring the intangible assets to the holding company and charging a fee to the operating company for the use of the patent or trademark, the company creates a deductible expense for the operating company while freeing the income from taxes.
The court has said petitioner banks are able to prove that implementation of the questioned revenue regulation violates the petitioners' rights insofar as it imposes a manner of allocation of deductible expense which is, as argued by the petitioners, contrary to settled practice and provisions of the tax code; that such implementation will require petitioners to dispute the tax assessments every time it is issued.
"Long term care insurance premiums can be a tax deductible expense and we believe a percentage of seniors neglect to take advantage of the deductibility," declares Jesse Slome, executive director of the American Association for Long-Term Care Insurance, the national trade group.
The Court of Federal Claims reviewed prior cases and determined that classification of such a payment as either a deductible expense or a constructive dividend is based on five factors.
Thus, the mismatch of income inclusion versus deductible expense previously enjoyed by taxpayers using SIFL to value personal use may be a thing of the past.
However, the entity's deductible expense was 10 times higher than the imputed income and, thus, was fully deductible to the S corporation, (20) under Sutherland Lumber.
The bureau imposed the punitive tax on the ground that the booking of the amount as a deductible expense was an act of malicious income concealment, according to the sources.
The IRS also said that a deductible expense is not converted to a capital expenditure solely because the expense is incurred as part of a reorganization.
1.162-25T limits the deductible expense to actual cost.
Additionally, a taxpayer could argue cleanup expenditures should be a currently deductible expense under regulations section 1.165-3(b), which, for example, permits a deduction for discovery of latent structural defects in the building after their acquisition."