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Business Expense Deduction - Initial Review Guide

Disclaimer

  1. Is the trade or business located within the Economic Development Area?  Is the trade or business "conducting business" within the Economic Development Area?  [See the Economic Development Area Manual (EDAM) for Economic Development areas and code references.]

    Check the business address on the California Technology, Trade and Commerce Website. If the business operates in multiple locations, check for an apportionment factor.

    The return address may be where records are kept, and may not be where the business is being "conducted."

  2. Does the balance sheet reflect an increase in the fixed asset accounts, taking into account reported dispositions of assets? 

    Compare the amount of qualified property with the amount of property purchased for the tax year.   Figure the amount of property purchased for the year by looking at the depreciation schedule, which should include a purchase date. Look at Schedule L, line 9 for corporations (subtract the beginning balance from the ending balance).

NOTE: See EDA Manual for interaction with Manufacturer's Investment Credit.

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