Instructions For Schedule C - Profit Or Loss From Business

This deduction may be subject to lim-

your business during the tax year (unless

Instead, treat these taxes as part of the

itations. For more information on poten-

you deducted them in a prior tax year).

cost of the property.

tial limitations, see Pub. 560.

However, if you had incidental materials

State and local sales taxes imposed

and supplies on hand for which you kept

on the buyer that you were required to

In most cases, you must file the ap-

no inventories or records of use, you can

collect and pay over to state or local

plicable form listed below if you main-

deduct the cost of those you actually

governments. These taxes are not inclu-

tain a pension, profit-sharing, or other

purchased during the tax year, provided

ded in gross receipts or sales nor are

funded-deferred compensation plan. The

that method clearly reflects income.

they a deductible expense. However, if

filing requirement is not affected by

the state or local government allowed

whether or not the plan qualified under

You can also deduct the cost of

you to retain any part of the sales tax

the Internal Revenue Code, or whether

books, professional instruments, equip-

you collected, you must include that

or not you claim a deduction for the cur-

ment, etc., if you normally use them

amount as income on line 6.

rent tax year. There is a penalty for fail-

within a year. However, if their useful-

Other taxes and license fees not re-

ure to timely file these forms.

ness extends substantially beyond a

lated to your business.

year, you must generally recover their

Form 5500-EZ. File this form if you

Line 24a

have a one-participant retirement plan

costs through depreciation.

that meets certain requirements. A

Line 23

Enter your expenses for lodging and

one-participant plan is a plan that covers

transportation connected with overnight

only you (or you and your spouse).

You can deduct the following taxes and

travel for business while away from

Form 5500-SF. File this form electron-

licenses on this line.

your tax home. In most cases, your tax

ically with the Department of Labor (at

State and local sales taxes imposed

home is your main place of business, re-

) if you have a small

on you as the seller of goods or services.

gardless of where you maintain your

plan (fewer than 100 participants in

If you collected this tax from the buyer,

family home. You cannot deduct expen-

most cases) that meets certain require-

you must also include the amount col-

ses paid or incurred in connection with

ments.

lected in gross receipts or sales on

employment away from home if that pe-

Form 5500. File this form electronical-

line 1.

riod of employment exceeds 1 year. Al-

ly with the Department of Labor (at

Real estate and personal property

so, you cannot deduct travel expenses

) for a plan that does

taxes on business assets.

for your spouse, your dependent, or any

not meet the requirements for filing

Licenses and regulatory fees for

other individual unless that person is

Form 5500-EZ or Form 5500-SF.

your trade or business paid each year to

your employee, the travel is for a bona

state or local governments. But some li-

fide business purpose, and the expenses

For details, see Pub. 560.

censes, such as liquor licenses, may

would otherwise be deductible by that

have to be amortized. See chapter 8 of

Lines 20a and 20b

person.

Pub. 535 for details.

Do not include expenses for meals

Social security and Medicare taxes

If you rented or leased vehicles, machi-

and entertainment on this line. Instead,

paid to match required withholding from

nery, or equipment, enter on line 20a the

see

Line

24b, later.

your employees' wages. Reduce your de-

business portion of your rental cost. But

if you leased a vehicle for a term of 30

duction by the amount shown on Form

Instead of keeping records of your

8846, line 4.

days or more, you may have to reduce

actual incidental expenses, you can use

Federal unemployment tax paid.

your deduction by an amount called the

an optional method for deducting inci-

Federal highway use tax.

inclusion amount. See Leasing a Car in

dental expenses only if you did not pay

Contributions to state unemploy-

chapter 4 of Pub. 463 to figure this

or incur meal expenses on a day you

ment insurance fund or disability benefit

amount.

were traveling away from your tax

fund if they are considered taxes under

home. The amount of the deduction is

Enter on line 20b amounts paid to

state law.

$5 a day. Incidental expenses include

rent or lease other property, such as of-

fees and tips given to porters, baggage

fice space in a building.

Do not deduct the following.

carriers, bellhops, hotel maids, stewards

Federal income taxes, including

Line 21

or stewardesses and others on ships, and

your self-employment tax. However,

hotel servants in foreign countries. They

you can deduct one-half of your self-em-

Deduct the cost of incidental repairs and

do not include expenses for laundry,

ployment tax on Form 1040, line 27 (or

maintenance that do not add to the prop-

cleaning and pressing of clothing, lodg-

Form 1040NR, line 27, when covered

erty's value or appreciably prolong its

ing taxes, or the costs of telegrams or

under the U.S. social security system

life. Do not deduct the value of your

telephone calls. You cannot use this

due to an international social security

own labor. Do not deduct amounts spent

method on any day that you use the

agreement).

to restore or replace property; they must

standard meal allowance

(as explained

Estate and gift taxes.

be capitalized.

in Line 24b, later).

Taxes assessed to pay for improve-

ments, such as paving and sewers.

You cannot deduct expenses for at-

Line 22

Taxes on your home or personal

tending a convention, seminar, or simi-

In most cases, you can deduct the cost of

use property.

lar meeting held outside the North

materials and supplies only to the extent

State and local sales taxes on prop-

American area unless the meeting is di-

you actually consumed and used them in

erty purchased for use in your business.

rectly related to your trade or business

C-8

Instructions For Schedule C - Profit Or Loss From Business - 2017 Page 8

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