Tips for 2011 tax year

Deduction, by a cash basis tax payer, of expense paid by check that was mailed on December 31

A payment by check is deductible when it is delivered to the payee or when it is placed in the mail, but only if the check is paid by the bank to the payee. [Rev. Rul. 80-335]. If at the time the check is presented to the bank, there are no funds in the account to cover the check but the taxpayer has overdraft protection and the bank honors the check, the deduction is still allowable in the year the check was given to the payee]. If when the check is presented to the payee, he is instructed to hold the check or delay the cashing of the check because the taxpayer’s account has insufficient funds, the expense is not deductible until the check is actually cashed  

Travel expenses reimbursement for an S corporation shareholder

 A sole owner of an S corporation that travels for business should receive reimbursement for his expenses from the corporation. The corporation reimburses his expenses for meals and lodging. Some of the reimbursement could be calculated using the Federal per diem rates.

When a taxpayer owns 10% or more of the S corporation, the corporation must reimburse the tax payer using the actual costs he incurs for lodging.  However, the corporation can reimburse his meals based on the Federal per diem rate.

Energy Tax Credit for 2011

Unless Congress retroactively extends IRC §25C, the credit for nonbusiness energy property, which included energy efficient insulation, windows, doors, roofs, fans, furnaces, boilers, heat pumps and biomass stoves, expired for property placed in service after 2011 [§25C(g)(2)].

 Nonbusiness energy credits are still available for 2011 qualifying purchases. However, they are greatly limited in comparison to credits available in 2009 and 2010. The 2011 nonbusiness energy credit is limited to a maximum of $500 and must be reduced (but not below zero) by the total nonbusiness energy credits taken in 2006, 2007, 2009 and 2010.

 The credit for the windows specifically is limited to a maximum of $200 per §25C. This code section also imposes the following limits as well: $50 for each advanced main air-circulating fan, $150 for each qualified natural gas, propane or oil furnace or hot water boiler and $300 for each item of energy efficient building property.