4. More Taxes to Pay:
 When we buy – Sales Tax
 When we sell – Sales Tax
 When we save – Capital Gains Tax
 When we own a house – Property Tax
School Tax & Local Taxes
 When we die – Estate Tax

5. Americans overpay their taxes by
$140 BILLION a year.
Your largest expense is the taxes you pay
in your lifetime, more than any other
expenses combined
(Food, clothing, housing, etc.)

7. The first day of the year in which
a nation as a whole has theoretically
earned enough income to fund its
annual tax burden.
Federal, state &
local taxes 365 (or 366) Tax Freedom
x =
--------------------- days Day
Total income

8. Federal, state & Local taxes $3,469 billion
= = 26.89%
Total Income $12,901 billion
26.89% x 365 days = 99 days = April 9

10. Year Tax Freedom Day Taxes as % of Income
-------------------------------------------------------------------------------------------------------------------------
1900 Jan 22 5.90%
1930 Feb 12 11.70%
1950 March 31 24.60%
2000 May 3 33.60%
2008 April 21 30.40%
2009 April 13 28.20%
2010 April 9 26.90%
Source: IRS; Congressional Research Service; Tax Foundation. 2010

13. Days Spent Days Spent
Working to Tax Freedom Working to Tax Freedom
State Pay Taxes Day Rank State Pay Taxes Day Rank
United States 99 April 9 -
Montana 95 April 5 33
Alabama 92 April 2 42 Nebraska 97 April 7 27
Alaska 85 March 26 50 Nevada 92 April 2 43
Arizona 94 April 4 37 New Hampshire 96 April 6 28
Arkansas 93 April 3 38 New Jersey 115 April 25 2
California 104 April 14 7 New Mexico 91 April 1 45
Colorado 100 April 10 17 New York 113 April 23 3
Connecticut 117 April 27 1 North Carolina 97 April 7 26
Delaware 100 April 10 18 North Dakota 93 April 3 39
Florida 95 April 5 31 Ohio 98 April 8 23
Georgia 98 April 8 24 Oklahoma 96 April 6 30
Hawaii 99 April 9 19 Oregon 98 April 8 20
Idaho 98 April 8 22 Pennsylvania 103 April 13 11
Illinois 101 April 11 14 Rhode Island 102 April 12 12
Indiana 96 April 6 29 South Carolina 93 April 3 40
Iowa 94 April 4 36 South Dakota 88 March 29 47
Kansas 97 April 7 25 Tennessee 91 April 1 44
Kentucky 93 April 3 41 Texas 95 April 5 32
Louisiana 85 March 26 49 Utah 101 April 11 15
Maine 94 April 4 34 Vermont 103 April 13 9
Maryland 109 April 19 4 Virginia 103 April 13 10
Massachusetts 104 April 14 6 Washington 105 April 15 5
Michigan 98 April 8 21 West Virginia 89 March 30 46
Minnesota 103 April 13 8 Wisconsin 102 April 12 13
Mississippi 87 March 28 48 Wyoming 101 April 11 16
Missouri 94 April 4 35 District of Columbia 105 April 15

14. The Federal Budget Deficit
Because of the federal government’s ability to deficit-finance its operations, Tax
Freedom Day moves somewhat independently from an alternative calculation that
adds the federal budget deficit to total taxes collected. In 2010, an unprecedented
budget deficit over $1.3 trillion produces a date of May 17, fully 38 days later than
Tax Freedom Day.
May 17

15. "Are the services that I receive from
the government
worth
a quarter to a third of my working
life?"

19. 120+ Million
(~43.4%)
American People
Pay
no tax at all.
(based upon federal income tax records - these people usually pay no state
income or property taxes either and pay an insignificant amount of other taxes).
In fact, some will soon be getting rebates for taxes that they never paid.

20. The 120+ million poor Americans,
who pay NO tax,
offset the effect of the less than
7 million rich taxpayers
(earning over $154,000 per year),
who pay more than 60%
of the taxes actually collected.
That means that
Tax Freedom Day actually comes closer
to representing the average middle-class American
Than either the rich or the poor.

21.  Age 35-54: 28.4%
 Work Status work full-time 50-52 wks: 25.9%
 Occupation:
Students (24%)
Other services (16.6%)
Administrative support (11.2%)
Sales (11.0%)
Retirees & other categories
Source: Tax Foundation, Estimated data for 2004

23. Of All the Taxes -
 SalesTax
 Capital Gains Tax
 Property Tax
 School Tax NO!
 Local Taxes
 Estate Tax

25. 52% of the 27.2 million
small businesses
in the United States are
home-based .
Source: U.S. Small Business Administration Office of Advocacy, September 2008

27. There are TWO tax
systems in this country.
One for One for
Salaried Small/Home-
Employees Based Business
Owners
Source: Sandy Botkin, CPA, Esq. Lower Your Taxes Big Time

28. Salaried Small/Home-
Employees Based Business
Owners
Legally Write Off Many
Pay Higher Social
Expenses Thanks to the
Security Tax &
IRS & Congress
Medicare Tax
Saving THOUSANDS OF
Fewer Deductibles DOLLARS every year

29. Employees Small/Home Business Owners
Taxed First & Spend Later Spend First & Taxed Later
After-Tax $$ Before-Tax $$ After-
Spent on Tax
Spent on
Personal Business- $$
Taxes Related
Expenses
Paid Expenses
gas, cars, computer, travel, eat- gas, cars, computer, travel, eat-
outs, Internet service, cell phone, outs, Internet service, cell phone,
home office, entertainment, … home office, entertainment, …
Personal Expenses: Business Expenses (ordinary and
Non-Deductible necessary): Deductible

30. • Separate business bank account
• Separate credit card for business expenses
• DBA (Do Business As) registered with county clerk
• Documentation/Proof of profit-generating
activities, training, business conduct
• Business record keeping system
Source: “Minding Her Own Business” by Jan Zobel

31. • IRS publication 334:
• Profit motive.
• Ongoing efforts.
• IRS reg. sec 1.183-2(b) – factors to determine
business activity:
• Put time and effort in carrying on the activity.
• Obtain training.
• Maintains complete and accurate books and
records.

32. In general – There shall be
allowed as a deduction all the
ordinary and necessary
expenses paid or incurred
during the taxable year in
carrying on any trade or
business.
Source: www.irs.gov

33. • Rent for an outside office • Interest on business loans
• Employee salaries and benefits • Licenses
• Equipment rental • Banking fees
• Legal and accounting fees • Advertising costs
• Car and truck expenses • Home office expenses
• Travel expenses • Business-related education
• Meal and entertainment expenses
expenses • Postage
• Supplies and materials • Professional association dues
• Publications • Business liability and property
• Subscriptions • Insurance
• Repair and maintenance • Health insurance for employees
• Expenses • Office utilities, and
• Business taxes • Software used for business

34.  IRS states: must maintain records that
support accurate tax returns.
 Documentation helps you to prove to
the IRS that you are pursing a profit.

35.  Records must be permanent, accurate,
and complete. (Notebook or diary)
 Includes sales slips, receipts, canceled
checks, mileage, expenses
 Record within 24 hours

36.  Many of your current household expenses become
business expenses
 Deductible from taxable income (include W-2
income)
 Lowered taxable income
= lower tax bracket
= pay less federal income tax
= pay less social security tax
= pay less medicare tax
= reduce or eliminate AMT

38. Starting in 2011, the federal income tax rates
in effect prior to the adoption of the Bush
Administration’s tax cuts in 2001 are
scheduled to return. The top income tax rate is
scheduled to go up to 39.6%, and the low 10%
bracket will be eliminated. Will this actually
happen, or will Congress extend the lower
rates? It’s impossible to say.

39. Starting in 2013, Medicare taxes for
high income taxpayers will go up by
0.9% to 3.8%. The increase applies
to self-employed people with net
self-employment income over
$200,000.

44. Effective Date Car Motorcycle Air Plane
Jan 01, 2011 $0.510 $0.480 $1.29
Jan 01, 2010 $0.500 $0.470 $1.29
Jan 01, 2009 $0.550 $0.520 $1.24
Aug 01, 2008 $0.585 $0.585 $1.07
Mar 19, 2008 $0.505 $0.305 $1.07
Feb 01, 2007 $0.485 $0.305 $1.07
Jan 01, 2006 $0.445 $0.305 $1.07
Sep 01, 2005 $0.485 $0.305 $1.07
Feb 04, 2005 $0.405 $0.305 $1.07
Jan 01, 2004 $0.375 $0.285 $0.995
Jan 01, 2003 $0.36 $0.275 $0.955
Jan 21, 2002 $0.365 $0.28 $0.975
Jan 22, 2001 $0.345 $0.275 $0.965
Jan 14, 2000 $0.325 $0.26 $0.88

45. You must own or lease the car and:
• You must use the standard mileage rate in the first year you use a car for
business or you are forever foreclosed from using that method for that
car.
• The car must not be used to transport persons or property for
compensation or hire, for example as a taxi
• You must not operate five or more cars at the same time, as in a fleet
operation
• You must not have claimed a depreciation deduction using the Modified
Accelerated Cost Recovery System (MACRS) on the car in an earlier year,
including any additional first-year depreciation or "bonus depreciation"
or any method other than straight-line for its estimated useful life
• You must not have claimed a Section 179 deduction or bonus depreciation
on the car; and you must not have claimed actual expenses after 1997 for
a car you leased, and
• You cannot use the standard mileage rate if you are a rural mail carrier
who received a "qualified reimbursement"

46. Gas Supplies & equipment
Oil change Depreciation expense
Repairs & maintenance Lease payments
Insurance Loan interest
License & registration State & local taxes
Wash & wax etc
Documentation Critical
Who, When, Where, Why and How Much
Recorded on a daily basis
Must provide written evidence
Vehicle log for a portion of the year is OK.
[Temp. Reg. 1.274-5T( c )(3)(ii)].

47. 1. 52-Week Mileage Book or Daily Log.
You will list every trip you take, whether for business, or
personal reasons.
2.Tracking Business Mileage
You will record your mileage only when you use your car for
business.
3. Sampling Method
- 90-Day Log. Keeping mileage records for a 90-day period
is considered an adequate representation of the entire year.
So you would keep a Daily Log for a 3-consecutive-month
period, say January through March. To get your annual
mileage total, you multiply the 3-month total by 4.
- One-week Log. Keep a log for just one week of each month.
Then you multiply that week's mileage by 4 to get the
monthly total.
You must scrupulously keep an appointment book showing
your business appointments all year long.

48. TOYOTA CAMRY 2001
Year Start End Total Business Use Commuting Personal Use
2007 78,658 86280 7622 3800 3822
2006 70534 78,658 8,124 4,000 4,124
2005 57,967 70,534 12,567 6,000 6,567
2004 38,972 57,967 18,995 12,000 3,080 3,598
2003 24,286 38,972 14,686 12,638 2,048
2002 20,500 24,286 2,786 2,286 500
2001 5,200 20,500 15,300 380 800 14,120
2000 0 5,200 5,200 3,564 1,636

49. Passenger Automobiles
1st tax year $11,060 ($3,060 + $8,000 bonus depreciation)
2nd tax year $4,900
3rd tax year $2,950
Each succeeding year $1,875
Trucks and Vans
1st tax year $11,160 ($3,160 + $8,000 bonus depreciation)
2nd tax year $5,100
3rd tax year $3,050
Each succeeding year $1,875
As long as you continue to use your car for business, you
can keep taking annual deductions after the 6-year
depreciation period ends until you recover your full basis
in the car.

50.  50 miles/day business mileage
 5 days/week
 = 250 miles/wk.
 250 miles/wk x 50 weeks
 =12,500 Business miles/year
 X .585/mile = $7,310 Auto Mileage deduction
 Discuss business other trips, they add to miles
and deduction – remember to DOCUMENT
trips
* Commuting to & from work is not deductible.

51.  Besides the standard mileage
deduction, you can also deduct partial
interests you paid on your financed
car.*
Example: FOR YEAR 2005
Your total mileage: 18,000 miles
Your business mileage: 12,500 miles = 70%
You paid the interest on your car: $2,400
You can deduct 70%: $1,680
Total Auto Deduction $8,990
* Source: www.IRS.gov

53.  The IRS states that the business trip is
any trip that requires you to sleep
• Away from home
• Overnight
• In a strange bed
• Conducting business.
Napping in the car does not count.
* For foreign travel deductions, go to www.IRS.gov.

54. Reg 1.162-2(b)(2):
 Must conduct business 3 of 5 days, >4 hr/day (>50% rule)
 Have business appointments scheduled in advance
 Record who, what, when, where and how much
 Attend training or business seminar
 Spouse/kids expense deduct if attend or assist
 Basic Deduction Guidelines:
– Airline, Train, Bus, Taxis, Rental cars, etc.
– Lodging, Hair styling, Dry clean, Nails
– 100% of food purchased from store
– 50% of meals in restaurant
– No receipts are required for travel expenses under $75
per expense, except for lodging.
* For foreign travel deductions, go to www.IRS.gov.

55. Giant Hint:
Whenever going to a business trip,
take all your
dirty cloth
with you.

56. (IRS pub. 463)
 Not-more-than-a-week travel: 100% tax-
deductible even if you only doing business
for 1 day and 6 days for fun.
 More-than-a-week travel: If more than 75%
time doing business, 100% tax deductible.
Otherwise, you only write off the percentage
calculated as business days/total days

58.  No any limitation
 You can take boat or cruise to attend
the Leadership School in Miami in
02/2008. You can take any ship which
doesn’t have to be U.S. ships.
 The ship MUST be a U.S. ship if you
take courses on the cruise.

59.  Deduction is to take the highest federal
per dim rate and double it
2009 Dates Highest Fed. PDR Daily Limit
01/01-06/30/2009 349 698
07/01-08/30/2009 323 646
09/01-09/30/2009 424 848
10/01-12/31/2009 411 822

60.  Example: A business trip from New York to
England by cruise or boat.
The federal per diem rate is $424 per day.
You can write off $424 x 2 = $848 per day.

61. Travel Days Count as Business Days
 When driving to destination, the total
days on travel need to follow the 300-
miles-per-day rule.
 Example: Drive from Washington DC to
Orlando for 800 miles. The travel days
should not greater than 6 days (round-trip).

62.  Sandwich weekends and federal holidays
between business days, even if you don’t do
any work.
 Exception: Assume you left on Sunday and
supposed to come back on Thursday. The air
fare is very expensive ($1300). If you come back
on Sunday, the air fare is very cheap ($450). In
this case, you can come back on Sunday. The
Friday, Saturday and Sunday will be count as
business days even if you only have fun on these
days. (Your expense should be less than the
savings.)

63. Travel With Family Members
 You drive from Washington DC to San Francisco
to attend the local seminars. If your whole
family will go together, you can only deduct all
your own expenses. But you can deduct the
highest single-person-room rate.
 Assume your hotel expense is $170 for your whole
family per day. If the highest single-person-
room rate is $160, you can write-off $160 per
day although your whole family stay in more
than 1 rooms.

64. Per Diem Method of Substantiating the Amount of Travel Costs
- The time, place and business purpose must still be substantiated
through adequate documentation
Tax Payer M&IE +Lodging M&IE Only IE Only
Self-employed
(Schedule C or F) No Yes Yes
Employer reimbursement of
unrelated employee Yes Yes Yes
Employer reimbursement of
10% related employee No No No
Un-reimbursed employee
(Form 2106, sch A) No Yes Yes

65. Effective Date: 10/01/2009 – 09/30/2010
Location M&IE ($)
Greensboro, NC 56
Miami, FL 66
Dallas, TX 71
Ocean City, MD 71
New York 71
Los Angeles 71

66. M&IE Total $46 $51 $56 $61 $66 $71
Continental
Breakfast/ 7 8 9 10 11 12
Breakfast
Lunch 11 12 13 15 16 18
Dinner 23 26 29 31 34 36
Incidentals 5 5 5 5 5 5

67.  You and spouse go to see parents in CA
 Parents are clients, days you meet with
them to discuss products = business days
 Post ad in newspaper to generate leads and
schedule appt in advance of trip to turn
other days into business days.
 Allowed 2 days for weekend – no business
 Travel days count as business days
 Conduct business more than 4 hours a day

68.  $350 x 2 for plane tickets
 $270 for rental car while in CA
 $500 Lodging ($100/day x 5 days hotel)
 $100 training seminar or local seminar
 $150 buy food to contribute to family meals
 $280 meals ($80 x 7 days x 50%)
 $2,000 x 2 trips/yr = $4,000 deduction for
vacations you were already taking
Total Vacation Deduction $4,000

70. IRS publication 529:
 Designated cell phone as your primary business
phone
 Have internet business, deduct internet access
 2nd line for fax = business line
 Have to receive/make business calls from home
phone, deduct ½ home phone
 Long distance calls discussing business

71.  $600 cell phone ($50/mo)
 $360 2nd line for fax ($30mo)
 $300 Home Phone ($50mo x½)
 $600 Internet Access ($50/mo)
 $180 Business LD calls ($15/mo)
 ADD $600 spouse cell if business
partner
 $2,640 Communications deduction
Total Communication Deduction $2,640

73.  IRS Sec. 274(a) allows a deduction for M&E
only if
- (1) directly related to business or
- (2) associated with business
 Tickets given to customers as thank you or
promotional gift
 Take friends/clients out to dinner, movie,
concert, baseball game, etc.
– Deduct 50% meal if business discussed
 Entertain at home, deduct 100% food
 Home Party, deduct 100% food
purchased from store if business
promoted directly. Must document!!

74.  You have to have a business
intent
Guest: “How is your business?”
You: “It is unbelievable.
I never have enough business
referrals, prospects, etc.”

75. You can deduct 50 percent of the difference
between the cost of your meal and what it
would cost you to eat at home.
 You are limited to 2 Dutch treat lunches a
week and up to 100 Dutch treat lunches a
year.
 You are limited to 2 Dutch treat breakfasts
a week and up to 100 Dutch treat
breakfasts a year.
 You are limited to 2 Dutch treat dinners a
week and up to 100 Dutch treat dinners a
year.
You can have totally 300 Dutch treat meals
a year.

76. If you split a lot of tabs and are worried
about the IRS might challenge your
deductions, you can save your grocery bills or
receipts from eating out for a month to show
what you usually spend.
You don’t need to keep track of which
grocery items you eat for each meal.
Instead, the IRS assumes that 50% of your
total grocery receipts are for dinner, 30% for
lunch, and 20% for breakfast.

77.  Eating alone is never tax-
deductible unless you are on a
travel
 Never eat alone when you are
NOT on a travel

78.  Dining out
 Going to a nightclub
 Attending a sporting event
 Going to a concert, movie, or the theater
 Visiting a vacation spot (a ski area or beach
resort, etc.)
 Taking a hunting, yachting, or fishing trip
 Etc.
Entertainment does not include activities
that are for business purposes only and
don’t involve any fun or amusement.

79. You must be with at least one person who can
benefit your business in some way. This could
include current or potential:
 Customers
 Clients
 Suppliers
 Employees
 Independent contractors
 Agents
 Partners
 Professional advisers

80.  Entertain business associates at home
 Cannot deduct the costs of inviting
nonbusiness guests to your house with the
possible exception of a business associate’s
spouse
 Keep receipts for expenses over $75, just as
you would for entertainment outside the
home.
 Entertain your spouse at home: 0% deductible

81. Keep a record showing:
 Date of entertainment
 Business purpose of entertainment
 Entertainment costs
 Set up a guest register that includes the
following columns:
 Name of guest (have them sign their name)
 Business Affiliation (e.g., member, V.P.
Finance, etc.)
 Referred by

82. If meal and entertainment expenses fit any of the following
exceptions, they are fully (100%) deductible:
 Recreational and social activities for employees:
– This includes activities such as:
 the company Christmas party and company picnic
 occasional meals, such as a pizza party,
 the Thanksgiving turkey or ham you give to
employees
 Promotional activities:
– For example, you provide food and beverages to
members of the general public who agree to sit through
your sales presentation.

83.  Tax-free de minimis fringe benefit:
– This applies to expenses of providing an employee
cafeteria on the employer's premises and more than 50%
of the employees to whom meals are provided are
furnished the meals for the employer's convenience.
 Meals and entertainment you pay for employees:
– You may deduct 100% of the cost of meals and
entertainment if the cost is included in the employees
compensation subject to income tax withholding.
 Restaurants:
– If you provide meals to employees at your own
restaurant do not include the cost in your employee's
compensation. Instead, include the cost in your cost of
goods sold.

84.  Make sure you document the following 6 items to
support your meal and entertainment expenses:
– Date
– Amount (including taxes and tip)
– Place
– Business purpose
– Name of business associate(s)
– Relationship of individual(s)
 customer, client, potential customer, employee.
– A good habit to get into is making notes on the back of receipts,
in a business diary, or calendar.
 Example:
– 6/20/2007, lunch with Jack Jones, customer; Figaro's restaurant;
$75; discussed Market America business opportunity.

85.  $300 Theatre tickets as gifts (customers can take
you as their guest and it’s still deductible)
 $625 Business meal ($25 x 50wk x 50%)
 $1500 Entertain in home – business mentioned
– $50 food/drinks/week x 30 weeks
 $375 Home Party, e.g., Open House, Holiday, etc.
– MUST have clear business function for ALL guests - products displayed and
discussed, business aspect part of entertainment, etc
– Document well – who, what, when, examples, photos
 $2,800 Entertainment Deduction
Total Entertainment Deduction $2,800

87.  Must use the space exclusively and regularly
(IRS sec 280A(c)(1)) for Business
 Separate room or area of home
(Prop. Reg. 1.280A-2(g)(1))
 Your home is your principal place of business
 Can’t be just desk in corner of
living room, TV room, etc.
 Storage of inventory or product samples
 2 methods:
– Room method: % of total # of rooms
– Square Footage Method: % of total square feet
 Must have net profit. If not, deductions are limited.
Carry forward to future years.
Exceptions: The storage of inventory or product
samples does not have to meet “exclusive use test”.
Check IRS guidelines and rules. www.IRS.gov

88. Expense Description Deductibility
Direct Things you buy only for Deductible in full
your home office
Indirect Things you buy to keep Deductible based on the
your entire home up and percentage of your home
running used as a business office
Unrelated Things you buy only for Not deductible
parts of your home that
are not used for business

89.  Direct Expenses
 Indirect Expenses
– Rent
– Mortgage interest and property taxes
 Save $153 in self-employment taxes for every
$1000
– Depreciation
– Utilities
– Insurance
– Home maintenance
– Casualty losses
– Condominium association fees
– Security system costs
– Etc.

90. 1. Take a picture of your home office and draw up a diagram
showing your home office as a portion of your home.
2. Have all your business mail sent to your home office.
3. Use your home office address on all of your business cards,
stationery, and advertising.
4. Obtain a separate phone line for your business and keep
that phone in your home office.
5. Encourage clients or customers to regularly visit your home
office, and keep a log of their visits.
6. To make the most of the time you spend in your home office,
communicate with clients by phone, fax, or e-mail instead
of going to their offices. Use a mail or messenger service to
deliver your work to customers.
7. Keep a log of the time you spend working in your home
office. This doesn’t have to be fancy; notes on your calendar
will do.

91.  Assume 2000 sq ft home w/ 200 sq ft bus
=10%
 Usual monthly expenses:
– $500 mortgage interest
– $250 real estate taxes
– $150 home owners insurance
– $300 utilities (elect, gas, water)
– $300 maid and lawn services
– $300 cleansers, paper products, repairs etc.
– $300 depreciation (100K 30 years) MUST TAKE
 Total $2100/mo x 10% x 12 mo = $2,520/yr
Total Home Office Deduction $2,520

93. • Hiring Your Children – to deduct $5700 for each
child aged between 7 and 18 years old in 2010.
- Salary, bonus, training expenses
- Other ordinary and necessary business expenses
• Hiring Your Legal Spouse - to deduct un-reimbursed
medical-related expenses - self-insured medical
reimbursement plan and travel expenses.
- Co-pays for doctors visits
- Annual insurance deductibles
- Prescription drugs
- Braces, glasses, dental
• Employment agreement, duty list
• Keep a weekly time sheet or time card.
• Pay them by the business check.

94. In general, children who are dependents (claimed on
someone else's tax return) must file a tax return if:
- they have earned income of $5,700 or higher (this is
the standard deduction amount for 2010, the amount
for 2008 was $5,450)
- they have unearned income (investment income) of
$950 in 2009 ($900 in 2008)
- they have gross income (both earned and unearned)
in excess of the larger of $950 or their earned income
plus $300.
http://children-and-taxes.blogspot.com/2009/07/children-and-taxes-when-kids-are.html

95.  8 ½ hours/month x 12 = 102 hours/year
 $5.15 /hour x 102 hours/year =
$525.30/year
 Benefit: deduct 100% of all medical
expenses and your travel expenses.

96.  Answer phone and take messages daily.
 Open and check the box of products ordered
 Clean office, sweep floor, wash cars
 Enter client data into computer, write Christmas
cards
 Watch baby
 Works 7.5 hours/week, or 30 hour/month
 Pay $12.50/hour x 30 hours/month = $375/month
 Deposited into a bank account that has her name
and my name on it.

98.  Products given as gifts – LABEL
 Advertisements
 Flyers, Signs, Tapes, Videos, etc.
 Free Samples
 Products openly displayed in home
 Donations to charities, raffles
 Business Cards
 Any literature, mailing with business
mention, website, etc.

99.  $25 per person per year
 You and your spouse are considered
as one person for figuring the $25
limitation.
But
 If you send a business gift to an
individual organization without
mentioning any person's name, it
will be 100% deductible.
 If a person's name is mentioned,
the $25-per-person-rule will apply.

100.  $300 Products as gifts- B-day, Xmas
 $500 advertise for bus partner in paper
 $250 products donated to raffle @ FMV
 $150 Gifts in form of books, tapes that
promote or relate to prods or business
 $200 free samples to prospects/clients
 $300 products displayed in home
 $150 Printing cards, flyers, letters, etc.
Total Promotional Deduction $1,850

101. 加速 折旧

102. Essentially, Section 179 of the IRS tax code allows
businesses to deduct the full purchase price of
qualifying equipment purchased or financed
during the tax year. That means that if you buy
(or lease) a piece of qualifying equipment, you
can deduct the FULL PURCHASE PRICE from your
gross income. It's an incentive created by the US
Government to encourage businesses to buy
equipment and invest in themselves. It is
sometimes referred to as the "SUV Tax Loophole"
or the "Hummer Deduction" because many
businesses have used this tax code to purchase
qualifying vehicles (like SUV's and Hummers.)

103. When your business buys certain pieces of
equipment, it typically gets to write them off a
little at a time through depreciation. In other
words, if your company spends $50,000 on a
vehicle, it gets to write off (say) $10,000 a year for
five years (these numbers are only meant to give you
an example.)
Now, while it's true that this is better than no write
off at all, most business owners would really prefer
to write off the entire equipment purchase price
for the year they buy it.

104.  Section 179 deductions (not available for
rental activity)
– Up to $125,000 in 2007 (Total Amt: $500K)
– Up to $250,000 in 2009 (Total Amt: $800K)
– Up to $250,000 in 2010 (Total Amt: $800K)
Section 179 does come with limits - there are caps to the total
amount written off ($250,000 in 2010), and limits to the total
amount of the equipment purchased ($800,000 in 2010.) The
deduction begins to phase out dollar for dollar after 800k, so
this makes it a true small and medium-sized business deduction.
However, in 2009, businesses that exceed the $250k deduction
limit can take a bonus depreciation of 50% on the amount that
exceeds the limit. And then also take normal depreciation on
the rest. In 2010, there is no 50% bonus depreciation.

105. Tax Year Upper Limit
2002 $24,000
2003 $100,000
2004 $102,000
2005 $105,000
2006 $108,000
2007 $125,000
2008 $250,000
2009 $250,000
2010 $250,000
2011 $500,000

106.  Camera
 Computer
 HDTV
 Vehicle
 Software, etc.

109. • 2011 Deduction Limit - $500,000 (up from
$250k previously). Good on new and used
equipment, including new software.
• 2011 Limit on equipment purchases - $2
Million Dollars (up from $800k previously).
• “Bonus” Depreciation - 100% (taken after the
$500k deduction limit is reached). Note, bonus
depreciation is only for new equipment. This can
also be taken by businesses that exceed $2
million in capital equipment purchases.

111. • Both new and used equipment qualify for
Section 179 Deduction (as long as the used
equipment is "new to you")
• Bonus Depreciation covers new equipment only.
• Bonus Depreciation is useful to very large
businesses spending more than $2 million on
new capital equipment in 2011;
• Businesses with a net loss in 2011 qualify to
deduct the cost of new equipment.

112. Year Federal Income Federal Income Tax Saving Federal Income Tax Savings
Tax Rate Using Section 179 Deduction Using Depreciation Deduction
2008 15% $750 (15% x $5,000 total $75 (15% x $500 of total $5,000
cost) cost)
2009 25% 0 250 (25% x $1,000)
2010 28% 0 280 (28% x $1,000)
2011 28% 0 280 (28% x $1,000)
2012 28% 0 280 (28% x $1,000)
2013 28% 0 140 (28% x $500)
Total $750 $1,305

113.  $500 Camera
 $1000 Computer
Total Section 179 Deduction $1,500

115. Knowledge Is Power
To qualify for an education deduction, you
must be able to show that the education:
- Maintains or improves skills required in
your business, or
- Is required by law or regulation to
maintain
your professional status

116. Knowledge Is Power
Deductible education expenses include:
- Tuition
- Fees
- Books
- Other learning materials
- Transportation
- Travel

117. - New Distributor Training
- Basic 5
- ECCT Training
- UnFranchise® Business Presentation
- Local Seminar
- District Rally
- Regional Convention
- Chinese Convention
- International Convention
- World Conference
- Upper-Level Training
- Moving-up Seminars
- Various Professional Certificates Training
Total Education Deduction $1,500

119.  Postage and Product Shipping & Handling Fee
 Office Supplies – pens, paper, labels, etc
 Office Equipment – lamps, desk, bookcase
 Refreshments for trainings in your home
 Dues and Subscriptions
 Legal and Professional Services
 Taxes and Licenses
 Business Bad Debts
 Casualty Losses
 Insurance for Your Business
 Interest on Business Loans
 Domestic Production Activities

120.  $150 Postage
 $250 Office Supplies
 $100 Dues and subscriptions
 $200 Refreshments
 $100 Business Bad Debts
Total Other Deduction $800

121. The money you spend to get your business up and
running.
 The deductible amount in the first year you are
in business:
– up to $5,000 before tax year 2010
– Up to $10,000 in tax year 2010
 Deduct the remainder, if any, in equal amounts
over the next 15 years.

122.  $8,990 Auto Mileage
 $4,000 Business Vacations/Travel
 $2,640 Communications
 $2,800 Entertainment
 $2,520 Home Office
 $3,200 Hire Children
 $1,850 Promotional
 $1,500 Section 179
 $1,500 Education
 $800 Other Deductions
$29,800 Business Deductions

124. Office 04-304; January 2004].
[Source: Information on Expenses Claimed by Small Business Sole Proprietor ships, General Accounting
Expense Percentage Claimed
1. Car and truck expenses 81%
2. Utilities 68%
3. Supplies (other than office supplies) 60%
4. Office supplies 60%
5. Legal and professional services 60%
6. Insurance 54%
7. Taxes 51%
8. Meals and entertainment 47%
9. Advertising 43%
10. Repairs 40%
11. Travel 31%
12. Rent on business property 26%
13. Home office 21%
14. Rent on equipment and machinery 21%
15. Interest 18%

125. TOTAL $29,800 Business Deductions
Converting Deductions to Tax Savings:
 If your tax bracket is 10%, you save $2,980.
 If your tax bracket is 15%, you save $4,470.
 If your tax bracket is 25%, you save $7,450.
 If your tax bracket is 28%, you save $8,344.
 If your tax bracket is 33%, you save $9,834.
 If your tax bracket is 35%, you save $10,430.

126. - $ 99.95 Renewal fee
- $ 1200 ($100 x 12) Products ordered
+$ 100 Retail profit
Maximum annual expenses for this business
$1200

127. Investment $1200
Tax Advantage $2980 - $10430
Free Products !!!
Free Services !!!
Never Bankrupt !!!

128. Stand up to the IRS
(Something the IRS doesn’t want you to know)

129. 1. Be Neat, Thorough, and Exact
2. Mail Your Return by Certified Mail
3. Don’t File Early
4. Don’t File Electronically
5. Form a Business Entity
6. Explain Items the IRS will Question
7. Avoid Ambiguous or General Expenses
8. Report All of Your Income
9. Watch Your Income-to-Deduction Ratio
10.Beware of Abnormally Large Deductions

130.  Tax Savings are Government paying you to be
in business
 Tax Laws favor businesses in ways that
employees never benefit
 Thoughtful tax planning pays/saves you $$$
 IMPORTANT POINTS:
– save receipts
– keep good records and daily calendar
– document your activities, so you calculate most
deductions, can prove deductions if audited & keep
your accountant happy