Deductions and Write-Offs
The most frequently asked tax questions related to Deductions and Write-Offs
Depreciation - computers
Asked Friday, September 29, 2000 by an anonymous userCPA Answer:
The depreciation year classification of a computer is 5 year property (5 year useful life)for MACRS depreciation purposes.
Depreciation - refrigerator and stove in a rental property?
Asked Friday, September 29, 2000 by an anonymous userCPA Answer:
The depreciation year classification of the refrigerator and stove and other appliances you use in your rental property is 5 year property for MACRS depreciation purposes.
What is depreciation year classification of a car I use for business ?
Asked Friday, September 29, 2000 by an anonymous userCPA Answer:
The depreciation year classification of a car used for business is 5 year property (5 year useful life)for MACRS depreciation purposes.
Can I use my partnership passive K-1 loss to offset some of my interest income?
Asked Friday, September 29, 2000 by an anonymous userCPA Answer:
Generally not. Interest income is defined as portfolio income, not passive income. Portfolio income includes interest, dividends, and gains on the sale of investment property. Passive K-1 losses can only be used to offset other passive income, except when the $25,000 special loss allowance for persons with active participation in rental real estate entities can be utilized. Speak to your local CPA about your K-1 loss deductibility.
Are the K-1 losses I incurred that were limited by the At Risk loss rules , lost ?
Asked Friday, September 29, 2000 by an anonymous userCPA Answer:
No. The K-1 disallowed losses due to the At Risk limitation rules are not lost and can be carried over and may be deductible in future years. The term "At risk" means the exposure to the danger of economic loss. A person can claim a tax deduction in a limited partnership up to the amount he or she is at risk if the taxpayer can show it is at risk of never realizing a profit and of losing its initial investment
Municipal bonds tax exempt income reporting
Asked Thursday, September 28, 2000 by an anonymous userCPA Answer:
Tax-exempt interest from municipal bonds, exempt interest dividends from a mutual fund or other regulated investment company, although not taxable, is reportable to the IRS on Form 1040 line 8b, as well as on Schedule B.
1099 - Interest slip - 50% owned - Nominee Interest
Asked Thursday, September 28, 2000 by an anonymous userCPA Answer:
Enter the total interest income amount on IRS Schedule B line 1, and under the subtotal of all the interest income, enter the 50% amount owned by your brother as a negative amount with the description "Nominee Distribution".
Early withdrawal from savings certificate
Asked Thursday, September 28, 2000 by an anonymous userCPA Answer:
Yes. The amount of the penalty on early withdrawal from your savings certificate is listed as an adjustment to income on Form 1040 line 30.
U.S. Treasury bonds Interest
Asked Thursday, September 28, 2000 by an anonymous userCPA Answer:
Interest earned on U.S. Treasury bonds is fully taxable for Federal purposes and reportable on IRS Schedule B, but not subject to state or local income taxes.