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Irs EfileIrs efile 1. Irs efile Deducting Business Expenses Table of Contents What's New Introduction Topics - This chapter discusses: Useful Items - You may want to see: What Can I Deduct?Cost of Goods Sold Capital Expenses Capital versus Deductible Expenses Personal versus Business Expenses How Much Can I Deduct?Not-for-profit limits. Irs efile At-risk limits. Irs efile Passive activities. Irs efile Net operating loss. Irs efile When Can I Deduct an Expense?Economic performance. Irs efile Not-for-Profit ActivitiesGross Income Limit on Deductions What's New Optional safe harbor method to determine the business use of a home deduction. Irs efile Beginning in 2013, you can use the optional safe harbor method to determine the deduction for the business use of your home. Irs efile See Optional safe harbor method under Business use of your home , later. Irs efile Introduction This chapter covers the general rules for deducting business expenses. Irs efile Business expenses are the costs of carrying on a trade or business, and they are usually deductible if the business is operated to make a profit. Irs efile Topics - This chapter discusses: What you can deduct How much you can deduct When you can deduct Not-for-profit activities Useful Items - You may want to see: Publication 334 Tax Guide for Small Business 463 Travel, Entertainment, Gift, and Car Expenses 525 Taxable and Nontaxable Income 529 Miscellaneous Deductions 536 Net Operating Losses (NOLs) for Individuals, Estates, and Trusts 538 Accounting Periods and Methods 542 Corporations 547 Casualties, Disasters, and Thefts 587 Business Use of Your Home 925 Passive Activity and At-Risk Rules 936 Home Mortgage Interest Deduction 946 How To Depreciate Property Form (and Instructions) Sch A (Form 1040) Itemized Deductions 5213 Election To Postpone Determination as To Whether the Presumption Applies That an Activity Is Engaged in for Profit See chapter 12 for information about getting publications and forms. Irs efile What Can I Deduct? To be deductible, a business expense must be both ordinary and necessary. Irs efile An ordinary expense is one that is common and accepted in your industry. Irs efile A necessary expense is one that is helpful and appropriate for your trade or business. Irs efile An expense does not have to be indispensable to be considered necessary. Irs efile Even though an expense may be ordinary and necessary, you may not be allowed to deduct the expense in the year you paid or incurred it. Irs efile In some cases you may not be allowed to deduct the expense at all. Irs efile Therefore, it is important to distinguish usual business expenses from expenses that include the following. Irs efile The expenses used to figure cost of goods sold, Capital expenses, and Personal expenses. Irs efile Cost of Goods Sold If your business manufactures products or purchases them for resale, you generally must value inventory at the beginning and end of each tax year to determine your cost of goods sold. Irs efile Some of your business expenses may be included in figuring cost of goods sold. Irs efile Cost of goods sold is deducted from your gross receipts to figure your gross profit for the year. Irs efile If you include an expense in the cost of goods sold, you cannot deduct it again as a business expense. Irs efile The following are types of expenses that go into figuring cost of goods sold. Irs efile The cost of products or raw materials, including freight. Irs efile Storage. Irs efile Direct labor (including contributions to pension or annuity plans) for workers who produce the products. Irs efile Factory overhead. Irs efile Under the uniform capitalization rules, you must capitalize the direct costs and part of the indirect costs for certain production or resale activities. Irs efile Indirect costs include rent, interest, taxes, storage, purchasing, processing, repackaging, handling, and administrative costs. Irs efile This rule does not apply to personal property you acquire for resale if your average annual gross receipts (or those of your predecessor) for the preceding 3 tax years are not more than $10 million. Irs efile For more information, see the following sources. Irs efile Cost of goods sold—chapter 6 of Publication 334. Irs efile Inventories—Publication 538. Irs efile Uniform capitalization rules—Publication 538 and section 263A of the Internal Revenue Code and the related regulations. Irs efile Capital Expenses You must capitalize, rather than deduct, some costs. Irs efile These costs are a part of your investment in your business and are called “capital expenses. Irs efile ” Capital expenses are considered assets in your business. Irs efile In general, you capitalize three types of costs. Irs efile Business start-up costs (See Tip below). Irs efile Business assets. Irs efile Improvements. Irs efile You can elect to deduct or amortize certain business start-up costs. Irs efile See chapters 7 and 8. Irs efile Cost recovery. Irs efile Although you generally cannot take a current deduction for a capital expense, you may be able to recover the amount you spend through depreciation, amortization, or depletion. Irs efile These recovery methods allow you to deduct part of your cost each year. Irs efile In this way, you are able to recover your capital expense. Irs efile See Amortization (chapter 8) and Depletion (chapter 9) in this publication. Irs efile A taxpayer can elect to deduct a portion of the costs of certain depreciable property as a section 179 deduction. Irs efile A greater portion of these costs can be deducted if the property is qualified disaster assistance property. Irs efile See Publication 946 for details. Irs efile Going Into Business The costs of getting started in business, before you actually begin business operations, are capital expenses. Irs efile These costs may include expenses for advertising, travel, or wages for training employees. Irs efile If you go into business. Irs efile When you go into business, treat all costs you had to get your business started as capital expenses. Irs efile Usually you recover costs for a particular asset through depreciation. Irs efile Generally, you cannot recover other costs until you sell the business or otherwise go out of business. Irs efile However, you can choose to amortize certain costs for setting up your business. Irs efile See Starting a Business in chapter 8 for more information on business start-up costs. Irs efile If your attempt to go into business is unsuccessful. Irs efile If you are an individual and your attempt to go into business is not successful, the expenses you had in trying to establish yourself in business fall into two categories. Irs efile The costs you had before making a decision to acquire or begin a specific business. Irs efile These costs are personal and nondeductible. Irs efile They include any costs incurred during a general search for, or preliminary investigation of, a business or investment possibility. Irs efile The costs you had in your attempt to acquire or begin a specific business. Irs efile These costs are capital expenses and you can deduct them as a capital loss. Irs efile If you are a corporation and your attempt to go into a new trade or business is not successful, you may be able to deduct all investigatory costs as a loss. Irs efile The costs of any assets acquired during your unsuccessful attempt to go into business are a part of your basis in the assets. Irs efile You cannot take a deduction for these costs. Irs efile You will recover the costs of these assets when you dispose of them. Irs efile Business Assets There are many different kinds of business assets; for example, land, buildings, machinery, furniture, trucks, patents, and franchise rights. Irs efile You must fully capitalize the cost of these assets, including freight and installation charges. Irs efile Certain property you produce for use in your trade or business must be capitalized under the uniform capitalization rules. Irs efile See Regulations section 1. Irs efile 263A-2 for information on these rules. Irs efile Improvements Improvements are generally major expenditures. Irs efile Some examples are: new electric wiring, a new roof, a new floor, new plumbing, bricking up windows to strengthen a wall, and lighting improvements. Irs efile The costs of making improvements to a business asset are capital expenses if the improvements add to the value of the asset, appreciably lengthen the time you can use it, or adapt it to a different use. Irs efile Beginning in 2014, you must capitalize as improvements costs that are for the betterment of a unit of property, restore the unit of property, or adapt the unit of property to a new or different use. Irs efile Temporary regulations allow you to capitalize costs meeting the above criteria for tax years beginning after 2011. Irs efile However, you can currently deduct repairs that keep your property in a normal efficient operating condition as a business expense. Irs efile Treat as repairs amounts paid to replace parts of a machine that only keep it in a normal operating condition. Irs efile Restoration plan. Irs efile Capitalize the cost of reconditioning, improving, or altering your property as part of a general restoration plan to make it suitable for your business. Irs efile This applies even if some of the work would by itself be classified as repairs. Irs efile Capital versus Deductible Expenses To help you distinguish between capital and deductible expenses, different examples are given below. Irs efile Motor vehicles. Irs efile You usually capitalize the cost of a motor vehicle you use in your business. Irs efile You can recover its cost through annual deductions for depreciation. Irs efile There are dollar limits on the depreciation you can claim each year on passenger automobiles used in your business. Irs efile See Publication 463. Irs efile Generally, repairs you make to your business vehicle are currently deductible. Irs efile However, amounts you pay to recondition and overhaul a business vehicle are capital expenses and are recovered through depreciation. Irs efile Roads and driveways. Irs efile The cost of building a private road on your business property and the cost of replacing a gravel driveway with a concrete one are capital expenses you may be able to depreciate. Irs efile The cost of maintaining a private road on your business property is a deductible expense. Irs efile Tools. Irs efile Unless the uniform capitalization rules apply, amounts spent for tools used in your business are deductible expenses if the tools have a life expectancy of less than 1 year or their cost is minor. Irs efile Machinery parts. Irs efile Unless the uniform capitalization rules apply, the cost of replacing short-lived parts of a machine to keep it in good working condition, but not add to its life, is a deductible expense. Irs efile Heating equipment. Irs efile The cost of changing from one heating system to another is a capital expense. Irs efile Personal versus Business Expenses Generally, you cannot deduct personal, living, or family expenses. Irs efile However, if you have an expense for something that is used partly for business and partly for personal purposes, divide the total cost between the business and personal parts. Irs efile You can deduct the business part. Irs efile For example, if you borrow money and use 70% of it for business and the other 30% for a family vacation, you generally can deduct 70% of the interest as a business expense. Irs efile The remaining 30% is personal interest and generally is not deductible. Irs efile See chapter 4 for information on deducting interest and the allocation rules. Irs efile Business use of your home. Irs efile If you use part of your home for business, you may be able to deduct expenses for the business use of your home. Irs efile These expenses may include mortgage interest, insurance, utilities, repairs, and depreciation. Irs efile To qualify to claim expenses for the business use of your home, you must meet both of the following tests. Irs efile The business part of your home must be used exclusively and regularly for your trade or business. Irs efile The business part of your home must be: Your principal place of business, or A place where you meet or deal with patients, clients, or customers in the normal course of your trade or business, or A separate structure (not attached to your home) used in connection with your trade or business. Irs efile You generally do not have to meet the exclusive use test for the part of your home that you regularly use either for the storage of inventory or product samples, or as a daycare facility. Irs efile Your home office qualifies as your principal place of business if you meet the following requirements. Irs efile You use the office exclusively and regularly for administrative or management activities of your trade or business. Irs efile You have no other fixed location where you conduct substantial administrative or management activities of your trade or business. Irs efile If you have more than one business location, determine your principal place of business based on the following factors. Irs efile The relative importance of the activities performed at each location. Irs efile If the relative importance factor does not determine your principal place of business, consider the time spent at each location. Irs efile Optional safe harbor method. Irs efile Beginning in 2013, individual taxpayers can use the optional safe harbor method to determine the amount of deductible expenses attributable to certain business use of a residence during the tax year. Irs efile This method is an alternative to the calculation, allocation, and substantiation of actual expenses. Irs efile The deduction under the optional method is limited to $1,500 per year based on $5 a square foot for up to 300 square feet. Irs efile Under this method, you claim your allowable mortgage interest, real estate taxes, and casualty losses on the home as itemized deductions on Schedule A (Form 1040). Irs efile You are not required to allocate these deductions between personal and business use, as is required under the regular method. Irs efile If you use the optional method, you cannot depreciate the portion of your home used in a trade or business. Irs efile Business expenses unrelated to the home, such as advertising, supplies, and wages paid to employees, are still fully deductible. Irs efile All of the requirements discussed earlier under Business use of your home still apply. Irs efile For more information on the deduction for business use of your home, including the optional safe harbor method, see Publication 587. Irs efile If you were entitled to deduct depreciation on the part of your home used for business, you cannot exclude the part of the gain from the sale of your home that equals any depreciation you deducted (or could have deducted) for periods after May 6, 1997. Irs efile Business use of your car. Irs efile If you use your car exclusively in your business, you can deduct car expenses. Irs efile If you use your car for both business and personal purposes, you must divide your expenses based on actual mileage. Irs efile Generally, commuting expenses between your home and your business location, within the area of your tax home, are not deductible. Irs efile You can deduct actual car expenses, which include depreciation (or lease payments), gas and oil, tires, repairs, tune-ups, insurance, and registration fees. Irs efile Or, instead of figuring the business part of these actual expenses, you may be able to use the standard mileage rate to figure your deduction. Irs efile Beginning in 2013, the standard mileage rate is 56. Irs efile 5 cents per mile. Irs efile If you are self-employed, you can also deduct the business part of interest on your car loan, state and local personal property tax on the car, parking fees, and tolls, whether or not you claim the standard mileage rate. Irs efile For more information on car expenses and the rules for using the standard mileage rate, see Publication 463. Irs efile How Much Can I Deduct? Generally, you can deduct the full amount of a business expense if it meets the criteria of ordinary and necessary and it is not a capital expense. Irs efile Recovery of amount deducted (tax benefit rule). Irs efile If you recover part of an expense in the same tax year in which you would have claimed a deduction, reduce your current year expense by the amount of the recovery. Irs efile If you have a recovery in a later year, include the recovered amount in income in that year. Irs efile However, if part of the deduction for the expense did not reduce your tax, you do not have to include that part of the recovered amount in income. Irs efile For more information on recoveries and the tax benefit rule, see Publication 525. Irs efile Payments in kind. Irs efile If you provide services to pay a business expense, the amount you can deduct is limited to your out-of-pocket costs. Irs efile You cannot deduct the cost of your own labor. Irs efile Similarly, if you pay a business expense in goods or other property, you can deduct only what the property costs you. Irs efile If these costs are included in the cost of goods sold, do not deduct them again as a business expense. Irs efile Limits on losses. Irs efile If your deductions for an investment or business activity are more than the income it brings in, you have a loss. Irs efile There may be limits on how much of the loss you can deduct. Irs efile Not-for-profit limits. Irs efile If you carry on your business activity without the intention of making a profit, you cannot use a loss from it to offset other income. Irs efile See Not-for-Profit Activities , later. Irs efile At-risk limits. Irs efile Generally, a deductible loss from a trade or business or other income-producing activity is limited to the investment you have “at risk” in the activity. Irs efile You are at risk in any activity for the following. Irs efile The money and adjusted basis of property you contribute to the activity. Irs efile Amounts you borrow for use in the activity if: You are personally liable for repayment, or You pledge property (other than property used in the activity) as security for the loan. Irs efile For more information, see Publication 925. Irs efile Passive activities. Irs efile Generally, you are in a passive activity if you have a trade or business activity in which you do not materially participate, or a rental activity. Irs efile In general, deductions for losses from passive activities only offset income from passive activities. Irs efile You cannot use any excess deductions to offset other income. Irs efile In addition, passive activity credits can only offset the tax on net passive income. Irs efile Any excess loss or credits are carried over to later years. Irs efile Suspended passive losses are fully deductible in the year you completely dispose of the activity. Irs efile For more information, see Publication 925. Irs efile Net operating loss. Irs efile If your deductions are more than your income for the year, you may have a “net operating loss. Irs efile ” You can use a net operating loss to lower your taxes in other years. Irs efile See Publication 536 for more information. Irs efile See Publication 542 for information about net operating losses of corporations. Irs efile When Can I Deduct an Expense? When you can deduct an expense depends on your accounting method. Irs efile An accounting method is a set of rules used to determine when and how income and expenses are reported. Irs efile The two basic methods are the cash method and the accrual method. Irs efile Whichever method you choose must clearly reflect income. Irs efile For more information on accounting methods, see Publication 538. Irs efile Cash method. Irs efile Under the cash method of accounting, you generally deduct business expenses in the tax year you pay them. Irs efile Accrual method. Irs efile Under an accrual method of accounting, you generally deduct business expenses when both of the following apply. Irs efile The all-events test has been met. Irs efile The test is met when: All events have occurred that fix the fact of liability, and The liability can be determined with reasonable accuracy. Irs efile Economic performance has occurred. Irs efile Economic performance. Irs efile You generally cannot deduct or capitalize a business expense until economic performance occurs. Irs efile If your expense is for property or services provided to you, or for your use of property, economic performance occurs as the property or services are provided, or the property is used. Irs efile If your expense is for property or services you provide to others, economic performance occurs as you provide the property or services. Irs efile Example. Irs efile Your tax year is the calendar year. Irs efile In December 2013, the Field Plumbing Company did some repair work at your place of business and sent you a bill for $600. Irs efile You paid it by check in January 2014. Irs efile If you use the accrual method of accounting, deduct the $600 on your tax return for 2013 because all events have occurred to “fix” the fact of liability (in this case the work was completed), the liability can be determined, and economic performance occurred in that year. Irs efile If you use the cash method of accounting, deduct the expense on your 2014 return. Irs efile Prepayment. Irs efile You generally cannot deduct expenses in advance, even if you pay them in advance. Irs efile This rule applies to both the cash and accrual methods. Irs efile It applies to prepaid interest, prepaid insurance premiums, and any other expense paid far enough in advance to, in effect, create an asset with a useful life extending substantially beyond the end of the current tax year. Irs efile Example. Irs efile In 2013, you sign a 10-year lease and immediately pay your rent for the first 3 years. Irs efile Even though you paid the rent for 2013, 2014, and 2015, you can only deduct the rent for 2013 on your 2013 tax return. Irs efile You can deduct the rent for 2014 and 2015 on your tax returns for those years. Irs efile Contested liability. Irs efile Under the cash method, you can deduct a contested liability only in the year you pay the liability. Irs efile Under the accrual method, you can deduct contested liabilities such as taxes (except foreign or U. Irs efile S. Irs efile possession income, war profits, and excess profits taxes) either in the tax year you pay the liability (or transfer money or other property to satisfy the obligation) or in the tax year you settle the contest. Irs efile However, to take the deduction in the year of payment or transfer, you must meet certain conditions. Irs efile See Regulations section 1. Irs efile 461-2. Irs efile Related person. Irs efile Under an accrual method of accounting, you generally deduct expenses when you incur them, even if you have not yet paid them. Irs efile However, if you and the person you owe are related and that person uses the cash method of accounting, you must pay the expense before you can deduct it. Irs efile Your deduction is allowed when the amount is includible in income by the related cash method payee. Irs efile See Related Persons in Publication 538. Irs efile Not-for-Profit Activities If you do not carry on your business or investment activity to make a profit, you cannot use a loss from the activity to offset other income. Irs efile Activities you do as a hobby, or mainly for sport or recreation, are often not entered into for profit. Irs efile The limit on not-for-profit losses applies to individuals, partnerships, estates, trusts, and S corporations. Irs efile It does not apply to corporations other than S corporations. Irs efile In determining whether you are carrying on an activity for profit, several factors are taken into account. Irs efile No one factor alone is decisive. Irs efile Among the factors to consider are whether: You carry on the activity in a businesslike manner, The time and effort you put into the activity indicate you intend to make it profitable, You depend on the income for your livelihood, Your losses are due to circumstances beyond your control (or are normal in the start-up phase of your type of business), You change your methods of operation in an attempt to improve profitability, You (or your advisors) have the knowledge needed to carry on the activity as a successful business, You were successful in making a profit in similar activities in the past, The activity makes a profit in some years, and You can expect to make a future profit from the appreciation of the assets used in the activity. Irs efile Presumption of profit. Irs efile An activity is presumed carried on for profit if it produced a profit in at least 3 of the last 5 tax years, including the current year. Irs efile Activities that consist primarily of breeding, training, showing, or racing horses are presumed carried on for profit if they produced a profit in at least 2 of the last 7 tax years, including the current year. Irs efile The activity must be substantially the same for each year within this period. Irs efile You have a profit when the gross income from an activity exceeds the deductions. Irs efile If a taxpayer dies before the end of the 5-year (or 7-year) period, the “test” period ends on the date of the taxpayer's death. Irs efile If your business or investment activity passes this 3- (or 2-) years-of-profit test, the IRS will presume it is carried on for profit. Irs efile This means the limits discussed here will not apply. Irs efile You can take all your business deductions from the activity, even for the years that you have a loss. Irs efile You can rely on this presumption unless the IRS later shows it to be invalid. Irs efile Using the presumption later. Irs efile If you are starting an activity and do not have 3 (or 2) years showing a profit, you can elect to have the presumption made after you have the 5 (or 7) years of experience allowed by the test. Irs efile You can elect to do this by filing Form 5213. Irs efile Filing this form postpones any determination that your activity is not carried on for profit until 5 (or 7) years have passed since you started the activity. Irs efile The benefit gained by making this election is that the IRS will not immediately question whether your activity is engaged in for profit. Irs efile Accordingly, it will not restrict your deductions. Irs efile Rather, you will gain time to earn a profit in the required number of years. Irs efile If you show 3 (or 2) years of profit at the end of this period, your deductions are not limited under these rules. Irs efile If you do not have 3 (or 2) years of profit, the limit can be applied retroactively to any year with a loss in the 5-year (or 7-year) period. Irs efile Filing Form 5213 automatically extends the period of limitations on any year in the 5-year (or 7-year) period to 2 years after the due date of the return for the last year of the period. Irs efile The period is extended only for deductions of the activity and any related deductions that might be affected. Irs efile You must file Form 5213 within 3 years after the due date of your return (determined without extensions) for the year in which you first carried on the activity, or, if earlier, within 60 days after receiving written notice from the Internal Revenue Service proposing to disallow deductions attributable to the activity. Irs efile Gross Income Gross income from a not-for-profit activity includes the total of all gains from the sale, exchange, or other disposition of property, and all other gross receipts derived from the activity. Irs efile Gross income from the activity also includes capital gains and rents received for the use of property which is held in connection with the activity. Irs efile You can determine gross income from any not-for-profit activity by subtracting the cost of goods sold from your gross receipts. Irs efile However, if you determine gross income by subtracting cost of goods sold from gross receipts, you must do so consistently, and in a manner that follows generally accepted methods of accounting. Irs efile Limit on Deductions If your activity is not carried on for profit, take deductions in the following order and only to the extent stated in the three categories. Irs efile If you are an individual, these deductions may be taken only if you itemize. Irs efile These deductions may be taken on Schedule A (Form 1040). Irs efile Category 1. Irs efile Deductions you can take for personal as well as for business activities are allowed in full. Irs efile For individuals, all nonbusiness deductions, such as those for home mortgage interest, taxes, and casualty losses, belong in this category. Irs efile Deduct them on the appropriate lines of Schedule A (Form 1040). Irs efile For tax years beginning after December 31, 2008, you can deduct a casualty loss on property you own for personal use only to the extent it is more than $500 and exceeds 10% of your adjusted gross income (AGI). Irs efile The 10% AGI limitation does not apply to net disaster losses resulting from federally declared disasters in 2008 and 2009, and individuals are allowed to claim the net disaster losses even if they do not itemize their deductions. Irs efile The reduction amount returns to $100 for tax years beginning after December 31, 2009. Irs efile See Publication 547 for more information on casualty losses. Irs efile For the limits that apply to home mortgage interest, see Publication 936. Irs efile Category 2. Irs efile Deductions that do not result in an adjustment to the basis of property are allowed next, but only to the extent your gross income from the activity is more than your deductions under the first category. Irs efile Most business deductions, such as those for advertising, insurance premiums, interest, utilities, and wages, belong in this category. Irs efile Category 3. Irs efile Business deductions that decrease the basis of property are allowed last, but only to the extent the gross income from the activity exceeds the deductions you take under the first two categories. Irs efile Deductions for depreciation, amortization, and the part of a casualty loss an individual could not deduct in category (1) belong in this category. Irs efile Where more than one asset is involved, allocate depreciation and these other deductions proportionally. Irs efile Individuals must claim the amounts in categories (2) and (3) as miscellaneous deductions on Schedule A (Form 1040). Irs efile They are subject to the 2%-of-adjusted-gross-income limit. Irs efile See Publication 529 for information on this limit. Irs efile Example. Irs efile Adriana is engaged in a not-for-profit activity. Irs efile The income and expenses of the activity are as follows. Irs efile Gross income $3,200 Subtract: Real estate taxes $700 Home mortgage interest 900 Insurance 400 Utilities 700 Maintenance 200 Depreciation on an automobile 600 Depreciation on a machine 200 3,700 Loss $(500) Adriana must limit her deductions to $3,200, the gross income she earned from the activity. Irs efile The limit is reached in category (3), as follows. Irs efile Limit on deduction $3,200 Category 1: Taxes and interest $1,600 Category 2: Insurance, utilities, and maintenance 1,300 2,900 Available for Category 3 $ 300 The $800 of depreciation is allocated between the automobile and machine as follows. Irs efile $600 $800 x $300 = $225 depreciation for the automobile $200 $800 x $300 = $75 depreciation for the machine The basis of each asset is reduced accordingly. Irs efile Adriana includes the $3,200 of gross income on line 21 (other income) of Form 1040. Irs efile The $1,600 for category (1) is deductible in full on the appropriate lines for taxes and interest on Schedule A (Form 1040). Irs efile Adriana deducts the remaining $1,600 ($1,300 for category (2) and $300 for category (3)) as other miscellaneous deductions on Schedule A (Form 1040) subject to the 2%-of-adjusted-gross-income limit. Irs efile Partnerships and S corporations. Irs efile If a partnership or S corporation carries on a not-for-profit activity, these limits apply at the partnership or S corporation level. Irs efile They are reflected in the individual shareholder's or partner's distributive shares. Irs efile More than one activity. Irs efile If you have several undertakings, each may be a separate activity or several undertakings may be combined. Irs efile The following are the most significant facts and circumstances in making this determination. Irs efile The degree of organizational and economic interrelationship of various undertakings. Irs efile The business purpose that is (or might be) served by carrying on the various undertakings separately or together in a business or investment setting. Irs efile The similarity of the undertakings. Irs efile The IRS will generally accept your characterization if it is supported by facts and circumstances. Irs efile If you are carrying on two or more different activities, keep the deductions and income from each one separate. Irs efile Figure separately whether each is a not-for-profit activity. Irs efile Then figure the limit on deductions and losses separately for each activity that is not for profit. Irs efile Prev Up Next Home More Online Publications
Delaware River Basin Commission
In 1961, the federal government and the governments of Delaware, New Jersey, Pennsylvania, and New York, entered into an agreement that created the Delaware River Basin Commission. The Commission has the independent legal authority to oversee and manage the Delaware River Basin.