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HALLIDAY & COMPANY is interested in helping you achieve your individual and business financial goals. Understanding basic financial and tax concepts will help prevent costly mistakes and allow you to operate as efficiently as possible. For this reason, we publish “ACCOUNT-ABILITY” as a resource of helpful information, which we hope, will benefit you personally and/or as a business owner. |
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E-Mail Halliday@hallidaycpa.com |
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This newsletter offers factual and up-to-date information on the subjects discussed, but should not be regarded as a complete analysis of these subjects. No party assumes liability for any loss or damage resulting from reliance or use of this material. |
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PER DIEM FOR SELF-EMPLOYEDS |
Self-employed individuals who travel can use IRS per diems for meals and incidentals without having to track actual expenditures, the Tax Court says. They still must show the time, place and purpose for the travel in order to use these per diems, which are $58 a day for meals and incidentals in high-cost locales and $45 a day elsewhere.
Only 50% of the per diem is deductible, the same as business meals, even though a portion of the allowance covers incidental expenses. But self-employed individuals cannot use per diems for lodging expenses. They must substantiate their deductions (Riley, TC Summ. Op. 2007-26). |
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Value Clothing Donations Carefully |
Overly optimistic valuations of donated clothes can cause tax woes. An investment banker gave an upscale thrift shop designer shoes and dresses she had worn once or twice. Although she filed Form 8283 with IRS and listed each item, she assumed the clothes barely depreciated in value. Therefore, she claimed a tax deduction of $49,000. The Tax Court disagreed and slashed the $49,000 deduction she claimed on the items to $9,000. But it let her off the hook for the 20% penalty for negligent understatements of tax (Stamoulis, TC Summ. Op. 2007-38). |