Tip of the Month for May 2002
Tax Tips Grab Bag
Are You One In a Million?
We hope not, at least not in this case. The IRS has announced that it has found more than one million returns with errors in the Rate Reduction Credit calculations. The line on your 1040 that deals with this is line 47 (for 1040A it’s line 30 and for 1040EZ it’s line 7). So, if you really want to find out about whether you’re one in a million here or not, you can read IR-2002-19 yourself and see if you’re one of the lucky ones.
Worried About Personal Use of The Company Jet?
Fret no more. Now you can take those jaunts to exotic places with a clear conscience. The Eight Circuit has ruled that a taxpayer corporation could deduct the full amount of the expenses for its officers using the corporate jet for non-corporate purposes. Why, you say, while remembering how you sweated over what was really an office supply and what was not? Well, the ruling was based on the perception of the non-corporate use of the corporate jet as a “fringe benefit” as defined by Section 61(a)(1) of the IRS code. What a relief.
Speaking Of flying ...
If you travel a lot for business and thereby accumulate frequent flyer miles, your ship has come in. According to IR-2002-18, the IRS has ruled that the receipt of frequent flyer miles or other in-kind promotional benefits that have come from business or official travel does not increase your tax liability. This is only if they are not converted to cash or compensation paid in the form of travel. However, the IRS has also said it’s not through with this yet. There are still a host of technical and administrative issues as yet unresolved. So, for now, fly the friendly skies to your frequent flyer miles’ content (but we recommend asking your CPA first, just to make sure).