Federal Tax, Tax

Certain Business Activities Qualify for Tax Deductions

Tax law generally allows deductions for ordinary and necessary business expenses incurred in carrying on a trade or business. However, an activity must be conducted with continuity and regularity and with the primary purpose of realizing income or profit. In one new case, the U.S. Tax Court found an individual didn’t conduct an activity in a businesslike manner. The court noted he didn’t maintain complete and accurate records or maintain a separate bank account for the activity. Therefore, he wasn’t entitled to tax deductions for his expenses. He was also denied a home office deduction because he didn’t use a portion of his apartment exclusively for business purposes. (TC Memo 2023-128). Contact us with questions. © 2023