vi Part II: Deducting Expenses Chapter Four: Understanding Your Business Expenses . . . . . . . . . . . . . . . . . . .83 Step One: Is the Expense Deductible? ............................... 83 Step Two: How Much of the Expense Is Deductible? . . . . . . . . . . . . . . . . . . . 85 Step Three: When Is the Expense Deductible?......................... 87 Claiming Deductions If You Aren’t Regulated ........................ 88 Using the Start-Up Rule .......................................... 91 Saving Your Money ............................................. 92 Nondeductible Expenses ......................................... 93 Chapter Five: Deducting Your Business Expenses . . . . . . . . . . . . . . . . . . . . . . .95 Advertising .................................................... 96 Bad Debts ..................................................... 97 Car and Truck Expenses.......................................... 97 Employee Benefit Programs...................................... 105 Insurance..................................................... 105 Interest....................................................... 106 Legal and Professional Services................................... 106 Office Expenses................................................ 107 Rent of Business Property........................................ 111 Repairs and Maintenance of Personal Property ....................... 111 Supplies...................................................... 112 Taxes and Licenses............................................. 114 Travel, Meals, and Entertainment.................................. 115 Utilities ...................................................... 115 Wages ....................................................... 116 Other Expenses ................................................ 116 Chapter Six: Deducting Your Home Expenses . . . . . . . . . . . . . . . . . . . . . . . . .121 Casualty Losses................................................ 122 Mortgage Interest and Real Estate Taxes............................ 123 Homeowners Insurance.......................................... 123 Home Repairs and Maintenance................................... 123 Utilities ...................................................... 124 Rent......................................................... 124 Moving Expenses .............................................. 126 Chapter Seven: Claiming Your Depreciation Expenses . . . . . . . . . . . . . . . . . .127 Understanding Depreciation ...................................... 128 Depreciating Your Car .......................................... 130 FCCRKG8-FourthPages.indd 6 3/10/10 9:20:59 AM