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| California has no such credit. You just need to make sure you receive the wage expense deductions against your California wages since you cannot just transfer the wage expense totals from federal as when the credit is not claimed. |
| Qualified clinical testing expenses |
| In order to motivate companies to make treatment drugs that would otherwise would not yield a profit, the Orphan Drug credit has been created. The Orphan Drug credit is geared more towards pharmaceutical companies than to individual taxpayers. The drugs created are the type of drug that would cure rare conditions. Taxpayers can claim the Orphan Drug Credit which gives them a 50% credit for having qualified clinical testing expenses for testing drugs to cure rare diseases or conditions. For federal tax purposes, you cannot use the same expenses you use for the credit as a deduction in other parts of your tax return. Doing so would trigger a double credit for the same items. Since California does not have an Orphan Drug Credit, any expenses that were used for the credit must be reversed in order to benefit from these expenses on your California tax return. To do this, you must enter the amounts that reduced the federal deduction for qualified clinical testing expenses on Schedule CA of Form 540 or Form 540NR, line 12, line 17, or line 18, column B. Although California does not have such a credit, it is important to consider this credit in your California tax calculations since some of the expenses that are deductible toward your federal taxes are used in a different manner for California tax purposes. |
| In order to motivate companies to make treatment drugs that would otherwise would not yield a profit, the Orphan Drug credit has been created. The Orphan Drug credit is geared more towards pharmaceutical companies than to individual taxpayers. The drugs created are the type of drug that would cure rare conditions. Taxpayers can claim the Orphan Drug Credit which gives them a 50% credit for having qualified clinical testing expenses for testing drugs to cure rare diseases or conditions. For federal tax purposes, you cannot use the same expenses you use for the credit as a deduction in other parts of your tax return. Doing so would trigger a double credit for the same items. Since California does not have an Orphan Drug Credit, any expenses that were used for the credit must be reversed in order to benefit from these expenses on your California tax return. To do this, you must enter the amounts that reduced the federal deduction for qualified clinical testing expenses on Schedule CA of Form 540 or Form 540NR, line 12, line 17, or line 18, column B. Although California does not have such a credit, it is important to consider this credit in your California tax calculations since some of the expenses that are deductible toward your federal taxes are used in a different manner for California tax purposes. |
| Business expense at a club that discriminates |
| Clubs which discriminate should not be allowed to be open. However, every club has the right to do business as they which under federal tax law. Unfortunately, discrimination is a freedom exercised by many. There is not much any of us can do about clubs that discriminate. According to the law, clubs can discriminate as long as they are truly private. What constitutes a public club and a private clubs is where it gets a bit more complex. The Supreme Court forced the Boys Clubs to admit girls and now the Boys Clubs is known as the Boys and Girls Clubs. The rule change was because the boys accepts all boys into the clubs, therefore it was really public. For federal tax purposes, any reasonable expense incurred necessary to perform your business, it a deductible expense for your federal tax return. It is not taken into account whether the club discriminates or not, but rather if the club is conducive for business communication or negotiation talks between partners or between the business and the clients. There are limitations in place to ensure that the deduction will not be abused. For example, expenses of taking your wife along will be allowed as business deductions for tax purposes if the client takes his wife along and the presence of your wife at the meeting would be an acceptable norm. To elaborate further, if you invite the client to dinner, it would probably be impractical not to invite his or her spouse. Therefore, you would have to take your spouse along and can deduct the cost for the client’s spouse’s dinner and your spouse’s dinner as well. Smart. You can have the IRS pay the bill. That’s what many people think, isn’t it? Not quite true. The IRS and California help you with part of the bill through a tax deduction on your tax return. You can go out to dinner all the time and make it tax deductible for both federal and California tax purposes if your meal expense meets the requirements. |
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Many states that include California and Minnesota have laws in place to make discrimination unacceptable. Some states such as California have managed to not allow tax breaks or tax deductions to clubs which discriminate. California has taken it a notch further by also disallowing individuals from taking tax deductions for business expenses incurred at a club that discriminates. If you take a business deduction for a business deduction incurred at a club that discriminates, you must make an adjustment on your California tax return for this expense on your Schedule CA of Form 540 or Form 540NR, line 12, line 17, or line 18, column C. You must do this even if the deduction is perfectly deductible for federal tax purposes. California has taken certain action to prevent discrimination. If the club discriminates, do deduction for business conducted in such club will be deductible. |
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| Revised: 07/09/15 |
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