Our long-time tax contributor Julian Block regularly receives commentary about his posts, as well as a multitude of emails from other practitioners.
Here he has compiled a list of Q&A’s around many of the latest tax-related issues from other practitioners and business owners. We hope you find it informative and, as ever, feel free to add your own comments and questions to this as well.
I’ve received emails from accountants on how to craft responses to questions from clients. I’ve edited and condensed the questions for clarity and brevity. – Julian Block
Q. I’m an architect and moonlight as a freelance writer. I went to a get-together with some of my fellow writers. There was no speaker; it was more of a social event. While I see it as networking with my professional colleagues, and most of the talk was about work-related issues, writing is only a part-time activity for me. Can I take a business-expense deduction for the cost of getting there on Schedule C of Form 1040? How about my cash contribution to the refreshments for the group?
A. It’s immaterial that you’re a part-time freelancer. Your writing endeavors needn’t be full-time for this kind of event to qualify. You’re entitled to claim the entire cost of round-trip travel between your home and the party’s site. For travel by bus, train or taxi, just keep track of your fares and claim them as business expenses; for auto travel, claim actual expenses or a standard mileage allowance.
The standard rate is 54.5 cents per mile for 2018, up from 53.5 cents per mile for 2017. Whether you claim actual expenses or use the mileage allowance, remember to deduct parking fees and bridge, tunnel and turnpike tolls that you pay while you’re on business, too.
As for noshing outlays, they fall into the category of meals and entertainment, and are subject to a cap. They’re only 50 percent deductible.
Q. When I’m not working as an architect or writer, I squeeze in time for my hobby of painting. I donated one of my paintings to a church bazaar, where it sold for $100. Can I deduct that as a contribution on Schedule A of the 1040 form?
A. No. Your deduction is limited to your unreimbursed out-of-pocket expenses for materials—the canvas, paints and brushes. The entire $100 is deductible only if you sell the painting yourself and donate the proceeds to the church. But this maneuver doesn’t help, because the bigger deduction is completely offset by an increase in your reportable income of $100.
Q. Am I allowed to deduct money spent for magazines purchased at a newsstand for pre-query research? These aren’t magazines I’m now writing for but magazines I hope to write for. And if I can, where on Form 1040 do I list those deductions?
A. The law allows you to deduct business-related publications, and these magazines are in that category. Like your other writing expenses, you claim them on Schedule C or on Schedule CZ, the shorter, one-page form that can be used by a business owner when expenses are below $5,000, a loss isn’t shown and certain other requirements are met.
Q. I’ve written several best-selling books on World War II. I plan to donate papers, including original manuscripts and historic correspondence with famous persons, to a university. Should I consult a tax expert on how to calculate the value of my charitable contribution?
A. Don’t bother, unless you write your manuscripts on legal tender. For your kind of property, a special restriction applies. In tax jargon, it is “ordinary-income property,” meaning property that, if sold by you, would result in ordinary income or short-term capital gain, rather than long-term capital gain. The measure of your allowable deduction is your cost for the property. Because your cost basis for the property is zero, you can claim no deduction.
Additional articles. A reminder for accountants who would welcome advice on how to alert clients to tactics that trim taxes for this year and even give a head start for next year: Delve into the archive of my articles (more than 250 and counting).
About Julian Block
Attorney and author Julian Block is frequently quoted in the New York Times, Wall Street Journal, and the Washington Post. He has been cited as “a leading tax professional” (New York Times), an “accomplished writer on taxes” (Wall Street Journal), and “an authority on tax planning” (Financial Planning magazine). More information about his books can be found at julianblocktaxexpert.com.