IRS refund issue dates

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Please remember that the PATH Act put restrictions on refunds from refundable credits like the Earned Income Tax Credit. The restrictions prohibit refunds being issued before 2/15, which based on this chart means those refunds won’t be issued until at least February 17, and possibly not until February 24.

Q & A – Can I deduct expenses against my oil and gas royalties?

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I received royalty income from an oil and gas lease. There are deductions on the back of the form, but the income reported on the 1099 is the entire gross amount. How do I fix this error?

The 1099 is prepared correctly with the gross royalty reported. Oil and gas operations often list expenses somewhere else on the 1099 form or in a related document. Assuming the expenses are ordinary and necessary, they are legitimate deductions in determining the taxable amount. The information should be reported on Schedule E and carry to the income section of 1040.

Bonus Depreciation: Does Your Business Qualify?

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Have you made building developments recently or are you planning any in the near term? Then you may qualify to take advantage of new rules for “qualified improvement property.” This category is broader than the former “qualified leasehold improvement property” category. Businesses may now be eligible to use bonus depreciation for improvements to the interiors of the nonresidential real estate made after the building was placed in service. There are limitations, but we can help you determine which property or improvements will or won’t qualify.

Businesses with qualifying improvements can receive a 50% depreciation deduction of the adjusted basis of qualifying property in the first year it’s placed in service in 2017, followed by lower percentages for 2018 and 2019. If you’ve made building improvements that might be eligible, be sure to contact our office today for more details.

2016 Tax Highlights

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