Facts: For the past two years, Minsu, a Korean American, has worked as a high school physical education teacher. He is also a body-builder and a part-time graduate student in educational technology at State University. In preparing for a master’s thesis he has decided to participate in Arnold’s World Body-building training program and analyzing advanced technology used to help students absorb physical education. Arnold’s training program has a regular faculty, curriculum, an enrolled body of students, and advanced technology in its gym equipment. Minsu earned $4,000 during the fall 20X5 as a body-builder by coming in second in the state contest. Minsu paid $3,000 in spring 20X5 for his masters’ degree tuition at State University for one class on advanced computer technology and another $5,000 to participate at Arnold’s.
Minsu wants to determine how much can he deduct on taxes? Minsu knows about relevant educational tax credits and want you to focus just on the deductions. Business expenses are the cost of carrying on a trade or business. These expenses are usually deductible if the business is operated to make a profit. Business expenses are the cost of carrying on a trade or business. For 2012, the standard mileage rate for the cost of operating your car for business use is 551 2 cents per mile. Car expenses and use of the standard mileage rate (26 U.S.C.A. § 162), (26 U.S.C.A. § 170), (Publication 463)
List of Relevant Authorities
The main objective of this Update is to clarify what are Business Deductions? To be deductible, a business expense must be both ordinary and necessary. An ordinary expense is one that is common and accepted in your trade or business. A necessary expense is one that is helpful and appropriate for your trade or business. An expense does not have to be indispensable to be considered necessary. Conclusion:
The code 26 U.S.C. § 162(a) states that Minsu can deduct all expenses that pertained to his job and schooling. All of the training that was done, the mileage that he placed on his car for traveling to and from training and every other expense associated with his master thesis can be deducted. Discussion of the Law: There shall be allowed as a deduction all the ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business, including—(1)a reasonable allowance for salaries or other compensation for personal services actually rendered; (2) Traveling expenses (including amounts expended for meals and lodging other than amounts which are lavish or extravagant under the circumstances) while away from home in the pursuit of a trade or business; and (3) Rentals or other payments required to be made as a condition to the continued use or possession, for purposes of the trade or business, of property to which the taxpayer has not taken or is not taking title or in which he has no equity. (26 U.S.C.A. § 162)
(ii) an educational organization which normally maintains a regular faculty and curriculum and normally has a regularly enrolled body of pupils or students in attendance at the place where its educational activities are regularly carried on. 26 U.S.C.A. § 170 Application of the Law: The Supreme Court Gambles on the Definition of Trade or Business: Commissioner v. Groetzinger
Tax Memo to the File
May 8, 2013
From: Earnest J. Lumpkin III
Subject: Sylvia Deductions
Facts: Sylvia is a professor in business at the University of Hawaii. She went on sabbatical for an academic year to take courses in Chinese at National Taiwan University in Taipei, Taiwan, to expand her knowledge of international business and to conduct research. On weekends and during the three week winter break Sylvia went sight-seeing by herself around the island, but one time gave a lecture in Tainan, Taiwan. Sylvia has documented her expenses and saved her receipts.
Sylvia wants to determine how much can he deduct for foreign travel?
List of Relevant Authorities
The main objective of this Update is to clarify what are Foreign Travel Dedcutions? When documenting your business trips outside the United States, your trip will fall into one of three categories: Travel Entirely for Business, Travel Primarily for Business, and Travel Primarily for Vacation. The factors which determine which category your trip falls into are: Number of business days versus total days away. If your goal is to have all your travel expenses be deductible, you will need to keep a daily log or diary of business activities to satisfy the who, what, where, when and why of IRC 274. For foreign travel, not only do you have to satisfy the business time requirement above, but you will have to satisfy additional hurdles IF: 1) Your total foreign travel days are more than 7 consecutive days AND
2) Your foreign travel “non-business days” are 25% or more of your total foreign travel days.
Conclusion: The code IRC 274 states that Sylvia can deduct some of her foreign travel based on certain parameters. The good thing is Sylvia has her receipts and documentation. She could also base her foreign deductions were due to her advancing her educational knowledge. Discussion of the Law: There shall be allowed as a deduction all the ( (ii) an educational organization which normally maintains a regular faculty and curriculum and normally has a regularly enrolled body of pupils or students in attendance at the place where its educational activities are regularly carried on. 26 U.S.C.A. § 170
Application of the Law: