Notice 2018-99 provides guidance on how to determine the nondeductible
portion of parking expenses in instances when the employer pays a third party to provide the parking and in instances when the taxpayer owns or leases a parking facility for the use of its employees.
Per IRS Publication 541, a partner's adjusted basis decreases for "partner's distributive share of nondeductible
partnership expenses that are not capital expenditures." In essence, partners receive no tax loss for nondeductible
expenses at the K-l level and consequently recognize a larger taxable gain upon disposition of the partnership interest because of the lower adjusted basis derived from the nondeductible
(See Trusted Advice, "Deducting IRA Contributions.") However, all eligible workers and spouses can make nondeductible
contributions to a traditional IRA, regardless of income.
Rollovers, conversions, nondeductible
contributions and inherited accounts can all have an impact on how distributions are taxed.
The practical effect is that a taxpayer must recover any nontaxable amount (basis) ratably as distributions are received, by tracking basis on Form 8606, Nondeductible
A taxpayer has basis in an IRA to the extent of nondeductible
contributions made to the IRA, minus any withdrawals and distributions of previously taxed contributions.
162(f) to clarify and limit the types of nondeductible
expenditures that are deemed to violate public policy.
So if you've maxed out your 401(k) or 403(b) contributions and don't qualify to make Roth IRA contributions because of your income level, you still can make nondeductible
contributions to a traditional IRA in 2009 and 2010 and then convert it to a Roth IRA in 2010.
Some owners, however, make nondeductible
contributions to their IRAs that, if withdrawn, would be considered a tax-free return of nondeductible
However, we can divide these into two main categories, deductible IRAs and nondeductible
As important, there are a host of court decisions that provide guidance to distinguish between nondeductible
fines and penalties and deductible amounts, such as restitution or other compensatory payments.
Examples include research and development tax credits, foreign income, nondeductible
book accruals and tax carryover benefits.