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For example, § 162(c)(1) disallows a deduction for illegal bribes or kickbacks to a domestic government official or agency, and § 162(f) disallows a deduction for fines paid to the government for violating the law. Furthermore, § 280E prevents a taxpayer from taking a deduction related to the business of selling illegal controlled substances.
Similarly, no business deduction is allowed "for any payment made, directly or indirectly, to an official or employee of any government [ . . . ] if the payment constitutes an illegal bribe or kickback or, if the payment is to an official or employee of a foreign government, the payment is unlawful under the Foreign Corrupt Practices Act of 1977."
A tax deduction or benefit is an amount deducted from taxable income, usually based on expenses such as those incurred to produce additional income. Tax deductions are a form of tax incentives , along with exemptions and tax credits .
It must be paid (4) in carrying on (meaning not prior to the start of a business or in creating it) (5) a trade or business activity. To qualify as a trade or business activity, it must be continuous and regular, and profit must be the primary motive. An expense can be a loss or profit. But the loss or profit need not really be an expense.
To qualify, the loss must not be compensated by insurance and it must be sustained during the taxable year. If the loss is a casualty or theft of personal property of the taxpayer, the loss must result from an event that is identifiable, damaging, and sudden, unexpected, and unusual in nature, not gradual and progressive.
However, this deduction is only available if the property loss occurred in a federally declared disaster area. If you take the standard deduction, you cannot deduct property taxes on your tax return.
The costs of high vs. low deductibles When deciding between a high or low deductible, it’s important to understand how this choice will affect your premiums . Here’s an example to show how ...
During FY 2009, the GAO reported that the U.S. government incurred approximately $683 billion in expenses for the Department of Defense (DoD) and $54 billion for Homeland Security, a total of $737 billion. The GAO financial statements present data on an accrual basis, meaning as expenses are incurred rather than actual cash payments. [47]