That rule provides that if an employer includes the value of a noncash fringe benefit in the employee's income, the employer may not deduct the amount as compensation for services, but rather, may deduct only the costs incurred in providing the benefit to the employee.
Because the homes were capital assets to the taxpayer, it could not deduct the payments to the RSCs against ordinary income.
338 deemed asset acquisition could deduct (rather than capitalize) severance payments made immediately after the acquisition, under agreements in place prior to the acquisition.
The IRS then addressed whether New Target could deduct the payments as ordinary and necessary expenses, or had to capitalize them as a cost of acquiring Old Target.
47) the Tax Court ruled that an employer's $20 million 1985 contribution to a VEBA was a capital expenditure, not a current business expense; thus, the employer could not deduct the entire amount in the year contributed, even though the contribution predated the enactment of the Secs.
419 and 419A deduction limits, employers did not have an unrestricted ability to prefund welfare benefits and deduct them currently.
A lessee may deduct
remaining basis in leasehold improvements when the lease is terminated; the tax consequences to the lessor are uncertain.
Before taxpayers rush to file amended Federal or state returns to deduct
seller-paid points on homes purchased after 1990, they should give serious thought to whether they want to reduce their cost basis in the home, a mandatory result of deducting seller-paid points.
263 to avoid allowing taxpayers to deduct
However, one can sympathize with the majority side of the Tax Court in that most students preparing for a career in elementary teaching cannot deduct their education expenses.
Taxpayers in managerial positions who have earned an MBA (or MBA-type) degree have been allowed to deduct their education expenses.
Assuming an education expense is ultimately determined to be deductible, the employee should deduct the expense on Schedule A as a miscellaneous itemized deduction, subject to the 2% floor.