Deductions and Write-Offs
The most frequently asked tax questions related to Deductions and Write-Offs
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Answer Tax QuestionsIs the cost for my basketball skybox rental totally deductible?
Asked Wednesday, September 27, 2000 by an anonymous user
No. There is a 50% cost limitation on meals and entertainment that include skyboxes. Also, if the rental is for more than 1 game, you are only allowed to deduct the face value cost of the non-luxury box seats for the number of seats in the box as the deductible amount. The deduction would be claimed on IRS Schedule C or Form 2106.
Refinance - Interest expenses
Asked Tuesday, September 26, 2000 by an anonymous user
Generally yes. If you refinance the same amount of your old mortgage existing balance with a new mortgage, then the mortgage interest is fully deductible.
If you refinance your home mortgage for more than the existing balance, then the deductibility depends on the amount financed and the use of the funds.
If the excess funds are used to build, buy or substantially improve your first or second home, then it is considered a Home Acquisition debt.
If the excess is used for other purposes, such as paying off credit card debt, for a car loan or paying for your child's education, then it is considered Home Equity debt.
There is a $100,000 (50,000 for MFS)maximum Home Equity debt interest allowed limitation and a 1 million (500,000 MFS) maximum Home Acquisition debt interest allowed limitation. The deduction will be claimed as a Schedule A mortgage interest itemized deduction.
The total itemized deductions claimed may also be limited based on your Adjusted Gross Income. Points paid on a refinance are amortized over the life of the new mortgage. Speak to your local CPA about the deductibility of the refinanced mortgage interest.
If you refinance your home mortgage for more than the existing balance, then the deductibility depends on the amount financed and the use of the funds.
If the excess funds are used to build, buy or substantially improve your first or second home, then it is considered a Home Acquisition debt.
If the excess is used for other purposes, such as paying off credit card debt, for a car loan or paying for your child's education, then it is considered Home Equity debt.
There is a $100,000 (50,000 for MFS)maximum Home Equity debt interest allowed limitation and a 1 million (500,000 MFS) maximum Home Acquisition debt interest allowed limitation. The deduction will be claimed as a Schedule A mortgage interest itemized deduction.
The total itemized deductions claimed may also be limited based on your Adjusted Gross Income. Points paid on a refinance are amortized over the life of the new mortgage. Speak to your local CPA about the deductibility of the refinanced mortgage interest.
Margin Interest
Asked Tuesday, September 26, 2000 by an anonymous user
The amount may be either fully, partially, or non-deductible.
The margin account investment interest expense is limited to the amount of net investment income, plus any elected amount of net capital gains from the sale of investment property such as stocks or mutual funds.
Generally, investment income is gross income from property held for investment, such as interest, ordinary dividends, royalties, or annuities. Limited investment interest in excess of investment income not deducted in the current year may be carried over to future years.
It is not lost. The deductible amount is figured on IRS Form 4952. Speak to your local CPA for the deductibility and possible elected amount of the net capital gain from investment property.
The margin account investment interest expense is limited to the amount of net investment income, plus any elected amount of net capital gains from the sale of investment property such as stocks or mutual funds.
Generally, investment income is gross income from property held for investment, such as interest, ordinary dividends, royalties, or annuities. Limited investment interest in excess of investment income not deducted in the current year may be carried over to future years.
It is not lost. The deductible amount is figured on IRS Form 4952. Speak to your local CPA for the deductibility and possible elected amount of the net capital gain from investment property.
Tax-exempt mutual fund interest
Asked Tuesday, September 26, 2000 by an anonymous user
Interest on loans to buy tax-exempt securities are not deductible.
Prepaid interest
Asked Tuesday, September 26, 2000 by an anonymous user
No. Pre-paid business or investment interest must be amortized over the life of the loan. It may not be deducted in full in the year pre-paid.
Church donation in late December
Asked Tuesday, September 26, 2000 by an anonymous user
A check dated and mailed at the end of the year is a charitable deduction on IRS Schedule A in that same year.
Sports club expenses - deductible ?
Asked Tuesday, September 26, 2000 by an anonymous user
A sport's organization that provides athletic equipment or facilities would not be considered a qualifying organization.
In general, qualifying organizations include, but are not limited to: Religious entities such as churches or synagogues; Charitable organizations such as the Salvation Army, Girl Scouts or Red Cross; Scientific/Educational entities such as hospitals or colleges;
Domestic such as non-profit veterans organizations; or a Fraternal lodge organization. Speak to your local CPA who has an IRS list of approved tax-exempt organizations.
In general, qualifying organizations include, but are not limited to: Religious entities such as churches or synagogues; Charitable organizations such as the Salvation Army, Girl Scouts or Red Cross; Scientific/Educational entities such as hospitals or colleges;
Domestic such as non-profit veterans organizations; or a Fraternal lodge organization. Speak to your local CPA who has an IRS list of approved tax-exempt organizations.
Cancer Society - charitable donation of stock
Asked Tuesday, September 26, 2000 by an anonymous user
You are allowed to claim the stocks as a charitable deduction on IRS Schedule A subject to AGI limitations the appreciated fair market value, not the cost.
The securities must be traded on a established securities market.
The securities must be traded on a established securities market.
Political contributions - deductible?
Asked Tuesday, September 26, 2000 by an anonymous user
No. Contributions made to political campaigns, political action committees or lobbying committees are not deductible.