TAX 3300 Lecture Notes - Lecture 5: Rebuttable Presumption, Itemized Deduction
Document Summary
Expenses not deductible but you can deduct them up to income. However, you can establish you have trade or business: expectation of making profit (if no its hobby, regularity, active participation. If you show us profit, bottom line, in 3 of the past 5 years then irs will believe you. And if you"re already in business it"s 2 out of 7. Now burden of proof is on irs to prove you wrong. Hobby rules: expenses are deductible up to income, when allocating expenses follow ordering rule, first other wise deductible, depreciation, _____ (fill in textbook, only deduct if you itemize, and they are 2% greater than agi. If you have vacation home that is personal use. Utility expense, maintenance ( all nondeductible) what if i rent it out. What if you just call it business but don"t rent? fraud/illegal. Government came up with 3 logical rules.
