J.K. Lasser's Small Business Taxes 2017

CHAPTER 13 Taxes and Interest

1. Deductible Taxes
2. Nondeductible Taxes
3. Deductible Interest
4. Nondeductible Interest and Other Limitations on Deductibility

Taxes and interest are two types of expenses that are hard to avoid. In the course of your business activities, you may pay various taxes and interest charges. Most taxes and interest payments are deductible; some are not.

For further information about deducting taxes and interest, see IRS Publication 535, Business Expenses.

Deductible Taxes

General Rules

In order to deduct taxes, they must be imposed on you. The tax must be owed by the party who pays it. If your corporation owns an office building, it is the party that owes the real property taxes. If, as part of your lease, you are obligated to pay your landlord's taxes, you can deduct your payment as an additional part of your rent; you do not claim a deduction for taxes, since you are not the owner of the property.

Taxes must be paid during the year if you are on a cash basis. If you pay taxes at year end by means of a check or even a credit card charge, the tax is deductible in the year the check is sent or delivered or the credit charge is made. This is so even though the check is not cashed until the following year or you do not pay the credit card bill until the following year. If you pay any tax by phone or through your computer, the tax is deductible on the date of payment reported on the statement issued by the financial institution through which the payment is made. ...