1040 Preparation and Planning 6: Gross Income: Business, Farm, and Rental Income (2023) (Currently Unavailable)

Author: Barbara Weltman, Sidney Kess, Greg White

CPE Credit:  5 hours for CPAs
5 hours Federal Tax Related for EAs and OTRPs
5 hours Federal Tax Law for CTEC

This CPE course, the sixth in the series, covers income and expenses of sole proprietors and independent contractors on Schedule C, farm income and expenses on Schedule F, and rents and royalties on Schedule E. The course reflects changes made by the Consolidated Appropriations Act, 2022, the Inflation Reduction Act of 2022, and other tax legislation, IRS pronouncements, and court decisions. This course brings the tax preparer "up-to-speed" in preparing 2022 tax returns for the 2023 filing season.

Publication Date: September 2022

Designed For
Tax practitioners.

Topics Covered

  • Business Income and Expenses
  • Spousal Businesses
  • Business Deductions
  • Reasonableness of Salaries
  • Determining Reasonable Salaries
  • What Constitutes a Trade or Business?
  • Examples of Common Ordinary and Necessary Business Expenses
  • Start-Up Expenses
  • Advertising Expenses
  • Business Bad Debts
  • Loans by Shareholder-Employees
  • Recovery of Bad Debts
  • The Nonaccrual-Experience Method
  • Statute of Limitations for Bad Debts
  • Explanation of Bad Debt Deduction on Tax Return
  • Bribes and Kickbacks
  • Fines and Penalties
  • Lobbying Expenses
  • Interest on Tax Deficiencies
  • Commercial Landlord
  • Repairs and Maintenance Costs
  • Capital Expenditure
  • Repair
  • Capital Items
  • Environmental Cleanup
  • Research and Development Expenditures
  • Carrying Charges, Interest, and Taxes on Real Estate
  • Travel Expenses
  • Expenses of Self-Employed Persons
  • Accountable Plans
  • Considerations for Reasonable Time
  • Types of Expenses
  • Depreciation
  • Classes of Property
  • Half-Year Convention
  • Optional Tables
  • Mid-Month Convention
  • Section 179 Deduction
  • Taxable Income Limitation
  • Bonus Depreciation
  • Alternative Depreciation System (ADS)
  • IRS Procedures
  • Section 1245 Recovery Property
  • Amortization
  • Business Start-Up Expenditures
  • Depletion
  • Business Losses
  • Net Operating Losses
  • Loss Carrybacks and Carryovers
  • Deductions
  • Passive Activity Loss (PAL) Rules
  • Tests to Determine Material Participation
  • Rental of a Home
  • Qualified Business Income Deduction

Learning Objectives

  • Complete Schedule C
  • Determine eligibility for and report deductions on a range of business expenses
  • Report deductions for travel-away-from-home costs
  • Determine whether meal cost limitations apply
  • Calculate deductions for business vehicle use
  • Figure the home office deduction
  • Explain property depreciation, first-year expensing, bonus depreciation, and depreciation recapture
  • Apply the rules for amortization, depletion, different types of losses, and bad debts
  • Identify expenses subject to amortization
  • Figure depletion deductions
  • Apply the limits on trade or business losses
  • Determine net operating losses
  • Determine whether a debt is a business or nonbusiness bad debt
  • List special deductions for farming activities
  • Apply the passive activity loss rules to businesses and rental activities
  • Determine when losses from the rental of a home are deductible
  • Figure the qualified business income deduction
  • Identify on which schedule the deduction for business bad debts (not related to farming) is reported
  • Identify how many years an individual has in which to file an amended return and report a bad debt
  • Identify what percentage of the cost of entertaining customers (or prospective customers), employees, business associates, and so on is deductible
  • Identify the maximum home office deduction that can be claimed if the simplified method is used
  • Identify which part of Schedule C self-employed persons should use to figure depreciation on a business car or truck if they are not otherwise required to file Form 4562
  • Identify over how many years residential real property is depreciated using the straight-line method and a mid-month convention
  • Identify the number of different rules for figuring depreciation recapture on real estate
  • Identify which type of depletion method may be used for all assets subject to depletion
  • Identify the IRS form used to calculate casualty losses


Instructional Method

NASBA Field of Study
Taxes (5 hours)

Program Prerequisites
1040 Preparation and Planning: Fundamentals or basic understanding of Form 1040.

Advance Preparation

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