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How particular does a business owner need to be with classifying

expenses. I'm not advocating or...
How particular does a business owner need to be with classifying expenses. I'm not advocating or suggesting a sloppy approach, but sometimes it is a little difficult to know how to classify an expense. For example: We track repairs and supplies we purchase for the shop. Now these shop supplies are, in a way, necessary to do the repairs, but are not parts purchased for specific repair jobs. Doesn't the IRS focus more on proving the validity of the business expense than classifying it exactly?
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2/19/2013
Shane-CPA
Shane-CPA, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 265
Experience: Shane Northrop is a Certified Public Accountant, Personal Financial Specialist and a Chartered Global Management Accountant
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Shane-CPA :

Hello...my name is XXXXX XXXXX I am a Certified Public Accountant. I look forward to assisting you with your tax question.

Shane-CPA :

The IRS is more concerned that the expense you are claiming is ordinary and necessary for the business and that similar businesses in the same industry would also incur these expenses. The categorizing of the expense isn't as important, although some expense categories have specific limitations. For example, the expense category of "meals and entertainment" is limited to 50% of the amount as a tax deduction, so obviously you wouldn't want to classify something in a category such as this which would limit the tax deduction.

Shane-CPA :

Charitable contributions is also another limited expense item for tax deductibility...

Shane-CPA :

As far as classifying something as part, supplies, office expense, repairs, etc....that would not be a major concern

Customer:

OK, Great. Would those two categories be the only two that I would need to be careful with?

Customer:

As far as taxation is concerned?

Shane-CPA :

Those expense categories and also depreciation expense are the categories that have specific tax deduction requirements...

Customer:

Thanks for your help. I'll rate your service as excellent!

Shane-CPA :

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Shane-CPA
Shane-CPA, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 265
Experience: Shane Northrop is a Certified Public Accountant, Personal Financial Specialist and a Chartered Global Management Accountant
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Shane-CPA
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