Question

a) A cash-basis business owner pays $2,300 for "in-house" lobbing expenses during the year. How much can she deduct?

b) What is the annual dollar limit of deductible compensation for the top five most highly compensated executives of a publicly held corporation?

c) A taxpayer traveled to a neighboring state to investigate the purchase of two restaurants in 2014. She pays/incurs investigation expenses of $35,000. Assuming she was not in the restaurant business previously, how much can she deduct in 014 if she acquires them and begins operations on July 1st?

Answer 1

a) Lobbying/political expenses are tax deductible as business expenses, nor as personal expenses. The Internal Revenue Service make this very clear that expenses incurred for lobbying expenses are non deductible expenses.

b) 1 million is the annual dollar limit of deductible compensation for the top five most highly compensated executives of a publicly held corporation, Section 162(m) prohibits publicly held companies from deducting more than $1 million per year in compensation paid to senior executive officers. The tax act removed an exemption for commission- and performance-based pay.

c) She can treat all costs she had to get her business started as capital expenses.

For costs paid or incurred after September 8, 2008, you can deduct a limited amount of start-up and organizational costs. The costs that aren't deducted currently can be amortized ratably over a 180-month period. The amortization period starts with the month you begin operating your active trade or business.