Monday, December 6, 2010

RRJ#4

Reference:

Stewart, R. (2010, September 13). “Can I Claim These Expenses in My Business?”. Retrieved from Evan Carmichael Sept 13, 2010. From: http://www.evancarmichael.com/Accounting/3598/Can-I-Claim-These-Expenses-In-My-Business.html

Summary:

In this article Ray Stewart explained the relationship between spending money on business and tax. According to Stewart, there are two kinds of expenses, those that are exempt from tax and those that are not. First, the expenses exempt from tax must have a strong relationship with one’s business and be documented. For example, business building rent, employees’ salaries, business office supplies, and business internet bills are exempt from tax if one has documents for them. Second, the expenses that are not exempt from tax don’t have any relationship with one’s business, such as home rent, home internet bills, and car repair. In addition, the author discussed some special situations about expenses and how to know if these expenses are exempt from tax or not. These include deductions for those who work at home, business travel and expenses of companies which work in the media.

Reaction:

I agree with the author when he divided the relationship among the expenses and tax into two kinds. Also, I think the author is good, for he can explain his points with clear examples. Moreover, this article gave me a general idea about the solution to some cases in accounting taxation. However, I think this relationship between expenses and tax is very complex, especially in the United States, because tax includes a lot of things like goods, rents and income by different percents in the American economy.

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