When you are faced with business tax planning issues, working closely with an attorney who will explain clearly all options and consequences can help to ensure that you make decisions that are in your business' best interests. Contact our firm today to schedule a consultation with an experienced tax attorney.
Tax Planning and Estate Planning Lawyers: Michigan and Nationwide
Attorney Jeffrey S. Freeman has practiced tax law since 1994. Today he leads a team of accomplished lawyers and a professional staff prepared to help you resolve current tax problems, guide you through innovative tax planning for your new or existing business, or help you develop a legally sound, comprehensive estate plan designed to provide maximum protection of your assets.
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Whether you are starting a business or organizing your personal affairs with an eye to tax consequences and other financial priorities, you can contact the Law Offices of Jeffrey S. Freeman for guidance based on extensive knowledge and experience. Based in Birmingham, Michigan, we frequently assist clients statewide, including the Detroit metro and throughout Wayne County, Oakland County, Macomb County and Washtenaw County.
At the Law Offices of Jeffrey S. Freeman, you will find lawyers with an in-depth understanding of finance and tax matters. We will prioritize your needs and protection of your interests as we deliver complete tax planning solutions for your family, new business or ongoing enterprise.
Income Tax Deductions for Businesses
Careful planning can allow a business to lessen its tax liability by using qualified income tax deductions. The Internal Revenue Code can be a daunting piece of text. It is exceedingly long and detailed. In addition, most sections of the IRC have corresponding regulations that further help to interpret its provisions. However, a basic understanding of deductions is important as they may lessen your business' tax liability. A tax attorney at Law Offices of Jeffrey S. Freeman in Birmingham, MI, can help your business minimize its tax obligation with federal income tax deductions.
Trade or Business Expenses
The Internal Revenue Code (IRC) provides that "all the ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business" are deductible. 26 U.S.C. §162. Section 162 specifically includes the following as deductible trade or business expenses:
(1) a reasonable allowance for salaries or other compensation for personal services actually rendered; (2) traveling expenses (including amounts expended for meals and lodging other than amounts which are lavish or extravagant under the circumstances) while away from home in the pursuit of a trade or business; and (3) rentals or other payments required to be made as a condition to the continued use or possession, for purposes of the trade or business, of property to which the taxpayer has not taken or is not taking title or in which he has no equity.
26 U.S.C. §162(a). Section 162 also sets forth various expenses that are not deductible.
The following trade or business expenses can generally be deducted under section 162:
- Office supplies and expenses: includes reasonable office expenses that are ordinary and necessary for the carrying on of a trade or business such as office supplies, rent and utility costs
- Business travel expenses: includes airfare, rental car and lodging expenses
- Meals and entertainment: half of the cost of a meal in a restaurant or an entertainment event if there was a business-related purpose for the meal or event
- Legal and professional services: includes payments to attorneys, consultants and accountants
- Car expenses: the costs of all driving done for business purposes; usually a business keeps track of mileage and deducts at the IRC's standard per mile rate
Other Deductions Available to Businesses
In addition to trade or business expense deductions, there are a number of other deductions available to businesses, including:
- Interest on indebtedness paid or accrued in a taxable year (26 U.S.C. §163)
- Various taxes, including property taxes (26 U.S.C. §164)
- Losses not compensated for by insurance or otherwise (26 U.S.C. §165)
- Depreciation of property used in a trade or business (26 U.S.C. §167)
- Charitable contributions (26 U.S.C. §170)
- Net operating losses (26 U.S.C. §172)
- Business start-up expenses (with certain restrictions) (26 U.S.C. §195)
Talk to a Tax Lawyer
The information above is simply an overview of the more common business deductions. There are a number of other itemized deductions that may apply. Such deductions can substantially lower a business' tax liability. An attorney at Law Offices of Jeffrey S. Freeman in Birmingham, MI can help your business maximize its federal income tax deductions.
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