IRS indicates when expense accounts need not be reported and also raises mileage rates

Article Abstract:

New regulations address the proper tax treatment and reporting of employee business expenses under reimbursement or expense allowance arrangements and the mileage and disbursement rates. Reimbursements or expense arrangements that fail to meet the requirements of Section 62(c) are subject to reporting and withholding requirements. Employee disbursement arrangements are entitled to deductions only if the arrangement meets three requirements: business connection; substantiation; and return of excess reimbursements. The standard mileage rate for business expenses is now 26 cents a mile for every mile. Calculations of the per diem allowance must not exceed the amount of anticipated expenses and be paid at the applicable federal per diem rate, a flat rate, or in accordance with a stated schedule specified by the Internal Revenue Service.

Analysis, Business travel, Expense deductions

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New regulations increase availability of tax benefits for research and experimental costs

Article Abstract:

Amendments proposed to the IRS regulations concerning research and experimental (R&E) costs and procedures will help the manufacturing and software industries. The 1989 proposals pay special attention to software development costs, allowing computer software development to qualify as R&E expenditures under the same rules applying to other products. The core of the proposals is that after a product meets its basic design specifications for function and performance, further expenditures after that point are not deductible unless expenditures are to cure significant design defects, to obtain significant cost reductions, or to significantly enhance performance.

Methods, Industrial research, Tax accounting

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