| Section 162 | 3-1 |
| Cost of Goods Sold | 3-2 |
| Capital Expenses - §263 | 3-3 |
| Cost Recovery Depreciation - §168 | 3-3 |
| Personal vs. Business Expenses | 3-3 |
| At-Risk Amounts - §465 | 3-3 |
| Passive Losses - §469 | 3-4 |
| Net Operating Loss - §172 | 3-4 |
| Creation of an NOL | 3-4 |
| Individual NOLs | 3-4 |
| Carryovers | 3-4 |
| Farming | 3-5 |
| Corporate NOLs | 3-5 |
| Timing of Expense Deduction | 3-6 |
| Economic Performance - §461 | 3-6 |
| Prepayment of Expenses | 3-6 |
| Contested Liability | 3-7 |
| Related Person - §267 | 3-7 |
| Expenses of Not-for-Profit Activities - §183 | 3-7 |
| Presumption of Profit | 3-8 |
| Using The Presumption Later | 3-9 |
| Limit on Deductions | 3-9 |
| Partnerships & S Corporations | 3-10 |
| More Than One Activity | 3-10 |
| Rent Expenses | 3-12 |
| Rent Paid In Advance | 3-13 |
| Lease vs. Sale | 3-13 |
| Leveraged Leases | 3-14 |
| Leveraged Leases Of Limited-Use Property | 3-14 |
| Leases over $250,000 - §467 | 3-14 |
| Taxes on Leased Property | 3-15 |
| Cost of Getting a Lease | 3-15 |
| Options To Renew | 3-16 |
| Cost Of A Modification Agreement | 3-16 |
| Commissions, Bonuses, & Fees | 3-17 |
| Loss On Merchandise & Fixtures | 3-17 |
| Leasehold Improvements - §168 | 3-17 |
| Assignment of a Lease | 3-17 |
| Capitalizing Rent Expenses - §263A | 3-18 |
| Interest Expense - §163 | 3-18 |
| Business Interest Limit - §162 | 3-18 |
| Interest Paid In Advance | 3-19 |
| Mortgage Interest | 3-19 |
| Prepayment Penalty | 3-19 |
| Points - §461 | 3-20 |
| Expenses to Obtain a Mortgage | 3-20 |
| Interest on Installment Purchases - §483 & §1271 | 3-20 |
| Investment Interest - §212 | 3-20 |
| Investment Property | 3-21 |
| Limit on Deduction | 3-21 |
| Net Investment Income | 3-22 |
| Investment Income | 3-22 |
| Capital Gain Inclusion Election | 3-22 |
| Investment Expenses | 3-22 |
| Losses from Passive Activities | 3-23 |
| Carryover | 3-23 |
| When to Deduct Investment Interest | 3-23 |
| Form 4952 | 3-23 |
| Interest on Margin Accounts | 3-23 |
| Interest on a Market Discount Bond | 3-24 |
| Nondeductible Interest | 3-24 |
| Interest on Income Tax Owed | 3-24 |
| Penalties | 3-24 |
| Commitment Fees & Service Charges | 3-24 |
| Capitalized Interest | 3-25 |
| Production Period | 3-25 |
| Traced Debt | 3-26 |
| Avoided Cost Debt | 3-26 |
| When Interest Is Paid or Incurred | 3-26 |
| Partnerships & S Corporations | 3-26 |
| Interest Related To Tax-Exempt Income - §265 | 3-26 |
| Interest on Insurance Policy Loans - §264 | 3-27 |
| Single Premium Life Insurance | 3-27 |
| Systematic Plan of Borrowing | 3-27 |
| Key Person Insurance | 3-29 |
| Deductibility of Premiums & Interest on Life Insurance | 3-30 |
| Existing Interest on Purchase | 3-30 |
| Corporate Acquisition Interest | 3-30 |
| Interest Allocation Rules for Multi-Purpose Loans | 3-30 |
| Allocation period | 3-31 |
| Proceeds Not Disbursed To Borrower | 3-31 |
| Proceeds Deposited In Borrower's Account | 3-32 |
| Order Of Funds Spent | 3-32 |
| Payments From Checking Accounts | 3-32 |
| Amounts Paid Within 30 Days | 3-32 |
| Optional Method For Determining Date Of Reallocation | 3-33 |
| Interest On A Separate Account | 3-33 |
| Accrued Interest | 3-34 |
| Accrued Interest Before Debt Proceeds Are Received | 3-34 |
| Loan Repayment | 3-34 |
| Continuous Borrowings | 3-35 |
| Loan Refinancing | 3-35 |
| Special Rules for Partnerships & S Corporations | 3-35 |
| Debt-Financed Acquisitions | 3-36 |
| Reallocation | 3-36 |
| How to Report | 3-36 |
| Debt-Financed Distributions | 3-36 |
| Optional Method | 3-37 |
| How to Report | 3-37 |
| Deductible Taxes | 3-37 |
| Tax Refunds | 3-37 |
| Change in Date of Tax Accrual | 3-38 |
| Real Estate Taxes | 3-38 |
| Local Benefits | 3-38 |
| Real Estate Taxes on Purchase Or Sale | 3-39 |
| Choosing To Ratably Accrue | 3-40 |
| Separate Choices | 3-40 |
| Making the Choice | 3-40 |
| Form 3115 | 3-40 |
| State & Local Income Taxes | 3-41 |
| Foreign Income Taxes | 3-41 |
| States & Local Sales Tax for Individuals | 3-41 |
| Employment Taxes | 3-41 |
| Unemployment Fund Taxes | 3-42 |
| Self-employment Tax | 3-42 |
| Other Taxes | 3-42 |
| Business Casualty & Theft Losses - §16 | 3-42 |
| Proof of Loss | 3-43 |
| Amount of Loss | 3-43 |
| Limitations | 3-43 |
| Dividends Received Deduction - §243 | 3-43 |
| Dividends from Domestic Corporations | 3-44 |
| 65% Exception | 3-44 |
| Ownership | 3-44 |
| Limitation | 3-44 |
| Other Selected Deductible Costs | 3-47 |
| Home-Office Deduction - §280A | 3-47 |
| Requirements - §280A | 3-47 |
| Non-Exclusive Use Exceptions | 3-47 |
| Income Limitation | 3-47 |
| Administrative or Management Activities | 3-48 |
| Research & Experimental Costs Deduction Repealed - §174(a) | 3-48 |
| Business Start-Up & Organizational Costs – §195 | 3-48 |
| How To Make The Choice | 3-49 |
| Carrying Charges | 3-49 |
| Intangible Drilling Costs | 3-49 |
| Exploration Costs | 3-49 |
| Partnerships | 3-50 |
| Reduced Corporate Deductions For Exploration Costs | 3-50 |
| Recapture Of Exploration Expenses | 3-50 |
| Mine Development Costs | 3-50 |
| Circulation Costs | 3-50 |
| Reforestation Costs | 3-50 |
| Retired Asset Removal Costs | 3-51 |
| Barrier Removal Costs | 3-51 |
| Deduction Limit | 3-51 |
| Partners & Partnerships | 3-51 |
| Qualification Standards | 3-52 |
| Other Barrier Removals | 3-52 |
| How To Make The Choice | 3-52 |
| Amortization | 3-53 |
| Deducting Amortization | 3-53 |
| Start-Up Costs - §195 | 3-53 |
| Amortization Period | 3-53 |
| Qualifying Costs | 3-53 |
| Purchasing An Active Trade Or Business | 3-54 |
| Corporate Organizational Costs - §248 | 3-54 |
| Qualifying Costs | 3-54 |
| Nonqualifying Costs | 3-55 |
| Partnership Organizational Costs - §709 | 3-55 |
| Qualifying Costs | 3-55 |
| Nonqualifying Costs | 3-56 |
| Partnership Liquidation | 3-56 |
| Costs of Obtaining a Lease | 3-56 |
| Intangibles - §197 | 3-59 |
| Cost Attributable To Other Property | 3-59 |
| Section 197 Intangibles Defined | 3-59 |
| Goodwill | 3-59 |
| Going Concern Value | 3-60 |
| Workforce In Place, Etc. | 3-60 |
| Business Books And Records, Etc. | 3-60 |
| Patents, Copyrights, Etc. | 3-60 |
| Customer-Based Intangible | 3-60 |
| Supplier-Based Intangible | 3-61 |
| Government-Granted License, Permit, Etc. | 3-61 |
| Covenant Not To Compete | 3-61 |
| Franchise, Trademark, Or Trade Name | 3-62 |
| Professional Sports Franchise | 3-62 |
| Contract for the Use of, or a Term Interest in, a §197 Intangible | 3-62 |
| Assets That Are Not §197 Intangibles | 3-62 |
| Computer Software | 3-63 |
| Computer Software Defined | 3-63 |
| Rights Of Fixed Duration Or Amount | 3-63 |
| Safe Harbor for Creative Property Costs | 3-64 |
| Anti-Churning Rules | 3-64 |
| Disposition of §197 Intangibles | 3-64 |
| Nondeductible Loss | 3-64 |
| Covenant Not To Compete | 3-65 |
| Nonrecognition Transfers | 3-65 |
| Research & Experimental Cost Amortization - §174(f) | 3-66 |
| Definitions – Reg. §1.174-2 | 3-66 |
| Product | 3-66 |
| Costs Not Included | 3-67 |
| Interaction with Research & Development Credit - §41 & §280 | 3-67 |
| Depletion - §613 | 3-67 |
| Cost Depletion | 3-68 |
| Basis For Depletion | 3-68 |
| Total Recoverable Units | 3-68 |
| Number Of Units Sold | 3-69 |
| Determining The Cost Depletion Deduction | 3-69 |
| Percentage Depletion | 3-69 |
| Gross Income | 3-69 |
| Taxable Income Limit | 3-70 |
| Partnerships & S Corporations | 3-70 |
| Partner's or Shareholder's Adjusted Basis | 3-70 |
| Records | 3-71 |
| Reporting the Deduction | 3-71 |
| Mines & Geothermal Deposits | 3-71 |
| Gross Income From The Property | 3-72 |
| Excise Tax | 3-72 |
| Extraction | 3-72 |
| Treatment Processes | 3-72 |
| Transportation Of More Than 50 Miles | 3-73 |
| Lessor's Gross Income | 3-73 |
| Bonuses & Advanced Royalties | 3-73 |
| Timber | 3-73 |
| Business Bad Debts - §166 | 3-75 |
| Credit Transactions | 3-76 |
| Income Inclusion | 3-77 |
| Accrual Method Taxpayers | 3-77 |
| Cash Method Taxpayers | 3-77 |
| Former Business | 3-77 |
| Debt Acquired from a Decedent | 3-77 |
| Political Debts | 3-77 |
| Insolvency of Partner | 3-78 |
| Business Loan Guarantees | 3-78 |
| Reporting | 3-79 |
| Methods of Treating Bad Debts | 3-79 |
| Specific Charge-Off Method | 3-79 |
| Partly Worthless Debts | 3-79 |
| Deduction Disallowed | 3-79 |
| Totally Worthless Debts | 3-80 |
| Recovery of Bad Debt | 3-80 |
| Property Received for a Debt | 3-80 |
| Bankruptcy Claim | 3-81 |
| Sale of Mortgaged Property | 3-81 |
| Net Operating Loss | 3-81 |
| Nonaccrual-Experience Accounting Method | 3-81 |
| Performing Services | 3-81 |
| Interest & Late Charges | 3-82 |
| Energy | 3-82 |
| Alternative Fuel Refueling Property Credit Termination - §30C | 3-82 |
| Clean Vehicle Credit Termination - §30D | 3-83 |
| Production Tax Credit (PTC) Expired - §45 | 3-83 |
| Carbon Capture & Sequestration Credit Enhancements - §45Q | 3-83 |
| Clean Hydrogen Production Tax Credit - §45V | 3-83 |
| Qualified Commercial Clean Vehicles - §45W | 3-83 |
| Advanced Manufacturing Production Credit - §45X | 3-84 |
| Clean Electricity Production Credit - §45Y | 3-84 |
| Clean Fuel Production Credit - §45Z | 3-84 |
| Investment Tax Credit (ITC) - §48 | 3-84 |
| Advanced Energy Project Credit - §48C(e) | 3-84 |
| Advanced Manufacturing Investment Credit - §48D | 3-85 |
| Clean Electricity Investment Credit - §48E | 3-85 |
| Energy Efficient Commercial Building Deduction - §179D | 3-85 |
| Depreciation - §168 | 3-86 |
| Personal Property | 3-86 |
| MACRS | 3-86 |
| Elections | 3-87 |
| Bonus (or Additional First-year) Depreciation - §168(k) | 3-87 |
| MACRS Conventions | 3-88 |
| Mid-quarter Convention Exception | 3-88 |
| Recapture - §1245 | 3-88 |
| Real Property | 3-89 |
| MACRS | 3-89 |
| Recapture - §1250 & §1245 | 3-89 |
| Section 1245 | 3-89 |
| Full Recapture | 3-89 |
| Section 1250 | 3-89 |
| Partial Recapture | 3-89 |
| MACRS Recapture Exception for Real Property | 3-90 |
| Alternative Depreciation System - §168(g) | 3-90 |
| Mandatory Application | 3-90 |
| Method | 3-90 |
