Depreciation of Lear Jet is not a business expense.In 1984 Stanley Kurzet sold his business and invested the proceeds in a Lear jet and a timber farm in Oregon. He also owned other business and investment properties and a residence in California. On their joint return, the Kurzets deducted de·duct v. de·duct·ed, de·duct·ing, de·ducts v.tr. 1. To take away (a quantity) from another; subtract. 2. To derive by deduction; deduce. v.intr. expenses for business travel from California to Oregon, including the costs of operating the jet. The IRS An abbreviation for the Internal Revenue Service, a federal agency charged with the responsibility of administering and enforcing internal revenue laws. challenged the deductions, especially the depreciation of the jet, which more than doubled the Kurzets' deduction. According to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. the service, these deductions were not ordinary and necessary business expenses under IRC (Internet Relay Chat) Computer conferencing on the Internet. There are hundreds of IRC channels on numerous subjects that are hosted on IRC servers around the world. After joining a channel, your messages are broadcast to everyone listening to that channel. section 162. The Tax Court agreed with the government and said, "Large transportation expenses (including significant noncash expenses such as depreciation) associated with the Lear jet appear to be out of the ordinary and unnecessary in light of the fact that [Kurzet's] timber farm was not producing any current income (due to [his] decision to defer de·fer 1 v. de·ferred, de·fer·ring, de·fers v.tr. 1. To put off; postpone. 2. To postpone the induction of (one eligible for the military draft). v.intr. cutting any of the timber)." The Tenth Circuit Court of Appeals held that the Tax Court had erred by including depreciation in the costs of operating the jet. Relying on Noyce v. Commissioner, 97 TC 670 (1991), the Tenth Circuit stated that depreciation should not be considered in assessing whether business expenses are reasonable under IRC section 162. By ignoring depreciation, the court cut the travel expense deductions in half and allowed the entire deduction. Observation. The Kurzets also argued that the time saved by traveling in their own jet, as opposed to commercial air travel, should be considered in determining whether an expense was reasonable. The Tenth Circuit agreed. * Stanley M. Kurzet v. Commissioner (CA 10, 8-16-2000), 86 AFTR AFTR American Federal Tax Reports (Prentice-Hall) AFTR Americans For Tax Reform AFTR Air Force Training Ribbon AFTR Air Force Training Record AFTR atrophy, fasciculation, tremor, rigidity AFTR Atomic Frequency Time Reference 2d, [paragraph] 2000-5166. Zero Taxes: Wave of the Future? A recent congressional study showed that more than 22% of the taxpayers filing returns in 1995 claimed zero or negative tax liability and estimated that for calendar year 2000 the number would jump to 34.7%. [GRAPH OMITTED] Source: A Guide to Tax Policy Analysis: The Central Tendency of Federal Income Tax Liabilities in Distributional Analysis, Joint Economic Committee, U.S. Congress --Michael Lynch, Esq., professor of tax accounting at Bryant College, Smithfield, Rhode Island Smithfield is a town in Providence County, Rhode Island, United States. It includes the historic villages of Esmond, Georgiaville, Mountaindale, Hanton City and Greenville. The population was 20,613 at the 2000 census. . |
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