Minsu Deductions

Topics: Education, Expense, Operating expense Pages: 3 (955 words) Published: September 18, 2013
Tax Memo to the File
May 8, 2013
From: Earnest J. Lumpkin III
Subject: Minsu Deductions
Facts: For the past two years, Minsu, a Korean American, has worked as a high school physical education teacher. He is also a body-builder and a part-time graduate student in educational technology at State University. In preparing for a master’s thesis he has decided to participate in Arnold’s World Body-building training program and analyzing advanced technology used to help students absorb physical education. Arnold’s training program has a regular faculty, curriculum, an enrolled body of students, and advanced technology in its gym equipment. Minsu earned $4,000 during the fall 20X5 as a body-builder by coming in second in the state contest. Minsu paid $3,000 in spring 20X5 for his masters’ degree tuition at State University for one class on advanced computer technology and another $5,000 to participate at Arnold’s.

Legal Issue:
Minsu wants to determine how much can he deduct on taxes? Minsu knows about relevant educational tax credits and want you to focus just on the deductions. Business expenses are the cost of carrying on a trade or business. These expenses are usually deductible if the business is operated to make a profit. Business expenses are the cost of carrying on a trade or business. For 2012, the standard mileage rate for the cost of operating your car for business use is 551 2 cents per mile. Car expenses and use of the standard mileage rate (26 U.S.C.A. § 162), (26 U.S.C.A. § 170), (Publication 463)

List of Relevant Authorities
The main objective of this Update is to clarify what are Business Deductions? To be deductible, a business expense must be both ordinary and necessary. An ordinary expense is one that is common and accepted in your trade or business. A necessary expense is one that is helpful and appropriate for your trade or business. An expense does not have to be indispensable to be considered necessary. Conclusion:

The code...
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