Business Expenditures and Deductions
Jane’s Air Conditioning Service decided that this year was the year to “take over” the air conditioning business in her town. Beginning in January, she started advertising her business (even though there was snow on the ground), bought a supply of Freon, updated her vehicles and bought new uniforms for her service technicians who were making house calls.
Jane comes to you to determine how to optimize her deductions in order to reduce her tax liability. What advice would you give her as to the expenditures above (assuming they all took place in the same year)? Be sure to also explain what may (or may not) be capitalized and/or deducted.
According to Gibson (2009), it is very advisable that someone considers their expenses throughout the year in order to find out the kind of expenses that qualify for tax deductions and the kind of expenses that do not qualify for tax deductions and another category of miscellaneous deductions. A tax plan is usually done every year because tax rules keep….