For use in Preparing 2004 Returns
Introduction, Useful Items and Important Changes

Chapter 1
Deducting Business Expenses

What Can I Deduct?

Cost of Goods Sold
Capital Expenses
Capital versus Deductible Expenses
Personal versus Business Expenses

How Much Can I Deduct?

When Can I Deduct an Expense?

Not-for-Profit Activities

Limit on Deductions

Chapter 2
Employees' Pay

Tests for Deducting Pay

Test 1—Reasonableness
Test 2—For Services Performed

Kinds of Pay

Awards
Bonuses
Education Expenses
Fringe Benefits
Loans or Advances
Property
Reimbursements for Business Expenses
Sick and Vacation Pay

Chapter 3
Retirement Plans

Simplified Employee Pension (SEP)

Contribution Limits
Deduction Limit
Salary Reduction Simplified Employee Pension (SARSEP)
Reporting SEP Contributions on Form W-2

SIMPLE Retirement Plans

SIMPLE IRA Plan

Qualified Plan

Kinds of Qualified Plans
Setting Up a Plan
Deduction Limits
Figuring Your Deduction
Example

Individual Retirement Arrangement (IRA)

Chapter 4
Rent Expense

Rent

Taxes on Leased Property

Cost of Getting a Lease

Improvements by Lessee

Capitalizing Rent Expenses

Chapter 5
Interest

Allocation of Interest

Interest You Can Deduct

Interest You Cannot Deduct

Capitalization of Interest

When To Deduct Interest

Below-Market Loans

Chapter 6
Taxes

When To Deduct Taxes

Real Estate Taxes

Income Taxes

Employment Taxes

Other Taxes

Chapter 7
Insurance

Deductible Premiums

Self-Employed Health Insurance Deduction

Nondeductible Premiums

Capitalized Premiums

When To Deduct Premiums

Chapter 8
Costs You Can Deduct or Capitalize

Carrying Charges

Research and Experimental Costs

Intangible Drilling Costs

Exploration Costs

Development Costs

Circulation Costs

Environmental Cleanup Costs

Business Start-Up and Organizational Costs

Reforestation Costs

Retired Asset Removal Costs

Barrier Removal Costs

Chapter 9
Amortization

How To Deduct Amortization

Going Into Business

Business Start-Up Costs
Costs of Organizing a Corporation
Costs of Organizing a Partnership
How To Amortize

Getting a Lease

Section 197 Intangibles

Section 197 Intangibles Defined
Assets That Are Not Section 197 Intangibles
Safe Harbor for Creative Property Costs
Anti-Churning Rules
Incorrect Amount of Amortization Deducted
Disposition of Section 197 Intangibles

Reforestation Costs

Pollution Control Facilities

Research and Experimental Costs

Chapter 10
Depletion

Who Can Claim Depletion?

Mineral Property

Cost Depletion
Percentage Depletion
Oil and Gas Wells
Mines and Geothermal Deposits
Lessor's Gross Income

Timber

Chapter 11
Business Bad Debts

Business Bad Debt Defined

Types of Business Bad Debts

When Debt Is Worthless

How To Treat

Specific Charge-Off Method
Nonaccrual-Experience Method

Recovery

Where To Deduct

Chapter 12
Electric and Clean-Fuel Vehicles

Definitions

Deductions for Clean-Fuel Vehicle and Refueling Property

Deduction for Clean-Fuel Vehicle Property
Deduction for Clean-Fuel Vehicle Refueling Property
How To Claim the Deductions
Recapture of the Deductions
Basis Adjustments

Electric Vehicle Credit

Qualified Electric Vehicle
Amount of the Credit
How To Claim the Credit
Recapture of the Credit
Basis Adjustments

Chapter 13
Other Expenses

Travel, Meals, and Entertainment

Reimbursements

Miscellaneous Expenses

Chapter 14
How To Get Tax Help