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DED. CASES (IN PROD INC (1.1.what is the expense's purpose?, 1.2.how…
DED. CASES
IN PROD INC
1.1.what is the expense's purpose?
1.2.how closely connected is it to prod inc?
2.2.if negligent = NOT inevitably part of trade
2.1.inevitable concomitant = deductable
3.1.recurring maintenance pmts for inc-earning ops = deductable
3.2.royalty pmts to use intell.p to prod inc = deductable
4.service package pmts = deductable
5.2.training fees necessary to trade effectively = deductable
5.1.aud fees = prod inc
ACTUALLY INCURRED
2.uncondtional legal oblig. needed
3.disputed amt = resolve dispute 1st
1.contingent pmt = conditions must be met
4.1.issue shares for asset = s40CA
4.2.issue shares for S rendered = no expenditure
NOT CAPITAL
1.1. establish,improve,add to inc earning plant = cap
1.2.cost to do inc earning activities = rev
2.exp to obtain inc earning right/structure = cap
3.was an enduring benefit made? (purpose of exp)
REPAIRS
1.cost to MAINTAIN inc earning ability
2.1.repair = replace/renewal of sub-parts
2.2.materials need not be the same
s23(g)
1.link to ability to trade + expenditure = trade
2.1.div declared + link w/ funds and Co's inc earning ability = prod of inc
2.2.borrow money + re-lending to make profit = trade
DURING YOA
1.deduct in yr occurred
2.can't claim in later yrs
DUAL PURPOSE
dividend stripping scheme - portion related to exempt inc
[taxable amt/tot amt] * CP = apportionment
CARRYING TRADE
1.wide interpretation of "trade"