Saturday, January 21, 2012

Business Debt Deduction

Business Debt resulting from a business activity can be deducted even if it results in a net loss from the activity. The IRS says that you can take deductions in excess of your business income through treasury regulations. Temp Treas Reg. 1163- 9T(b)(2)(i)(4)

Temp. Tres. Reg. 1.163-pT(b)(2)(i)(A) specifies that interest on income tax deficiencies is not attributable to a taxpayer’s conduct of trade or business, regardless of the source of income, but rather is “personal interest” within the meaning on § 163(h). The IRS will determine what is properly allocable when giving an audit or deciding what is an appropriate size of the deduction.

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