The End of Many Miscellaneous Deductions

Beginning in 2018, many miscellaneous deductions have been suspended.

Beginning in 2018, many miscellaneous deductions have been suspended.

These suspended deductions will impact your taxable income if you are a building owner or investor. However, many of our clients have told us that the Tangible Property Regulations have reduced taxes enough to offset these eliminated deductions. Yet another reason to learn and utilize these mandatory regulations.

There are basically two categories of miscellaneous expenses that have been eliminated are:

  1. Miscellaneous itemized deductions subject to the 2% AGI floor
  2. Expenses that are traditionally nondeductible under the Internal Revenue Code.

Suspended miscellaneous itemized deductions include:

  • Unreimbursed employee expenses (exceptions apply)
  • Appraisal fees
  • Investment fees and expenses
  • Casualty and theft losses
  • Depreciation on home computers
  • Fees to collect interest and dividends
  • Indirect Deductions of Pass-through Entities
  • Legal expenses.

The good news is that along with the Tangible Property Regulations, there are still deductions that are NOT subject to the 2% of AGI limit and are still deductible as miscellaneous itemized deductions. These items are reported on Schedule A.

  • Amortizable premium on taxable bonds
  • Federal estate tax on income in respect of a decedent
  • Gambling losses up to the amount of gambling winnings

Although these suspended deductions can drastically reduce your deductions, cost segregation AND the Tangible Property Regulations can help reduce the pain.

Kevin Jerry is a nationally recognized expert in Tax Method Changes. He specializes in Cost Segregation, Tangible Property Regulations, and revenue recognition changes. Kevin graduated cum laude from the University of Cincinnati with a Master of Science Degree in Real Estate Taxation. Over the last seven years, he has worked with Eric Wallace on the Tangible Property Regulations with some of the largest property owners in the country.