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NCBVA BULLETIN
Tax-Time Tips on Telephone Deductions
February, 1998
NATIONAL CONCRETE BURIAL VAULTASSOCIATION, INC. STATEMENT OF FINANCIAL POSITION December 31, 1997
By J. Scott Calkins, Esq. NCBVA Legal Counsel
A taxpayer who uses a home telephone for business purposes my deduct any charges incurred exclusive of the monthly base rate, such as business long distance phone calls. The base rate including taxes for the first phone line into the home is not deductible; the cost of a business-only second line is deductible. Business calls made while traveling away from home are a deductible item. This includes any business communication by devices such as a fax machine. Cellular phones that are used for business purposes can give rise to a depreciation deductible. However, if the phone does not have more than 50% business use, depreciation deductions are limited and the section 179 deduction is not allowed. Commuting to work is a nondeductible expense. Having a telephone installed in your car to make occasional business calls during the commute does not make the expense deductible.
Don't rely on IRS telephone advice The Internal Revenue Service is not bound by the advice it gives taxpayers over the telephone. In a recent Tax Court decision, the Court sustained the IRS' deficiency assessment for income tax and the 10% penalty tax on premature IRA distributions. The taxpayers in the case, a married couple, withdrew funds from their individual retirement accounts to finance the purchase of their primary residence. Upon inquire, the taxpayers received telephone advice from an IRS employee that such withdrawals were non-taxable. In sustaining the deficiency assessment on premature IRA distribution, the Tax Court said the IRS is not bound by advice given over the telephone by IRS personnel but that taxpayers must follow the tax code and case law. The lesson in this case is to call your accountant or tax advisor when you are considering a transaction that is out of the ordinary.
ASSETS Current assets Cash and cash equivalents Prepaid expenses Total Current Assets Noncurrent assets Equipment, net of accumulated depreciation TOTALASSETS
114 $14,056
LIABILI I IES AND NET ASSETS Current Liabilities Convention registration fees 1998 Total Current Liabilities Net assets Unrestricted net assets TOTAL LIABILITIES AND NETASSETS -
1.030 1.030 13.026 $14,056
STATEMENT OFACTIVITIES Unrestricted Net Assets Support and Revenue: Membership dues Interest income Liberty Mutual transfer Convention Performance standards Total Revenue
$56,070 2,761 4,931 40,606 5,600 109,968
Expenses: Board of directors expense Convention Plant Certification Bulletins and directories Travel and entertainment Professional fees Office expenses Other expenses Depreciation Total Expenses
6,926 33,018 5,600 7,136 3,021 48,855 6,832 431 76 109.895
Increase In Unrestricted Net Assets J. Scott Calkins, Esq. is a partner in the law firm of Calkins and Campball in Harrisburg, PA. He serves as legal counsel for NCB VA.
$13,309 633 13.942
Net Assets at Beginning of Year Net Assets at End of Year
73 12.953 $13,026