BARBARA WELTMAN is an attorney and a nationally recognized expert in taxation for small businesses, as well as the author of many top-selling books on taxes and finance, including J.K. Lasser’s 1001 Deductions & Tax Breaks. She is also the publisher of Idea of the Day^® and Big Ideas for Small Business^®, a contributor to SBA.gov, and quoted regularly in major publications (including the New York Times, the Wall Street Journal, and Consumer Reports). Visit her at www.BigIdeasForSmallBusiness.com.

Preface v

Introduction ix

Part 1 Organization 1

1. Business Organization 3

2. Tax Year and Accounting Methods 36

3. Recordkeeping for Business Income and Deductions 51

Part 2 Business Income and Losses 61

4. Income or Loss from Business Operations 63

5. Capital Gains and Losses 95

6. Gains and Losses from Sales of Business Property 113

Part 3 Business Deductions and Credits 125

7. Employee Compensation: Salary, Wages, and Employee Benefits 127

8. Travel, Meals, and Gift Expenses 160

9. Car and Truck Expenses 182

10. Repairs, Maintenance, and Energy Improvements 205

11. Bad Debts 221

12. Rents 232

13. Taxes and Interest 242

14. First-Year Expensing, Depreciation, Amortization, and Depletion 257

15. Advertising Expenses 290

16. Retirement Plans 296

17. Casualty and Theft Losses 334

18. Home Office Deductions 348

19. Medical Coverage 366

20. Deductions and Tax Credits for Farmers 385

21. Qualified Business Income Deduction 396

22. Miscellaneous Business Deductions 410

23. Roundup of Tax Credits 444

Part 4 Tax Planning for Your Small Business 457

24. Income and Deduction Strategies 459

25. Distributions from Your Business 473

26. Tax Strategies for Opening or Closing a Business 477

27. Tax Strategies for a Sideline Business 490

28. Tax Strategies for Multiple Businesses 494

29. Alternative Minimum Tax 499

30. Other Taxes 504

31. Filing Tax Returns, Paying Taxes, and Making Refund Claims 522

32. Retirement and Succession Planning 535

33. Working with CPAs and Other Tax Professionals 543

34. Handling Audits with the IRS 547

Appendix A. Information Returns 553

Appendix B. Tax Penalties 561

Appendix C. Checklist of Tax-Related Corporate Resolutions 567

Appendix D. List of Dollar Limits and Amounts Adjusted for Inflation 569

Index 573

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