ACCT 485 Lecture Notes - Lecture 17: Quality Control, Small Business, Deferral
17 Oct 2016
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Related-party transaction: constructive ownership provisions are applied to determine whether taxpayers are related. Taxpayer deemed to own stock owned by lineal descendants, ancestors, brothers, sisters, half-brothers, half-sisters, and spouse. Taxpayer deemed to own proportionate share of stock owned by any partnership, corporation, estate, or trust of which the taxpayer is a member. Taxpayer deemed to own any stock owned (directly or indirectly) by taxpayer"s partner. Expenses related to tax-exempt income: such expenses are not deductible. Includes the interest on any indebtedness incurred to purchase or carry tax-exempt obligations: if it is not taxable on the income side, it is not deductible on the expense side. If it doesn"t add value, it doesn"t belong there. Some are deductible in other areas, they just do not fall under research and experimental expenditures: basically r&d, three alternative tax treatments. Taxpayer may elect to expense all of the expenditures incurred in the current year and all subsequent years.
