Week6 discussions Article Example | Topics and Well Written Essays - 250 words

Week6 discussions - Article Example The Net Operating Loss occurs under various specific rules. First, the amount is carried back to two preceding tax years and applied against all the taxable incomes. Subsequently, this move gives rise to a tax rebate. Conversely, an individual or company can carry forward the amount to the next twenty years, applying it to all the possible taxable incomes. Noteworthy, the NOL becomes obsolete after the elapsing of the twenty years (Freitag, & Tax Management Inc., 2010). Therefore, the timing of an NOL should be very strategic in a bid to attain the highest tax benefit. From intensive deliberations in the e-activity, I would highly recommend that one should apply the Net Operating Loss in the earliest period possible. Substantially, this move will make more financial sense due to the favorable time value of money as opposed to the future unpredictable value of money. In this regard, a taxpayer will undoubtedly reap the highest tax benefit from a comparative aspect. In the event where a taxpayer will mix pleasure and business travel, a tax break will be evident. All the leisure expenses incurred during travel for work should be justified as business expenses. The biggest deduction error made by taxpayers subjected to auditing is the lack of accurate and well-dated receipts and events. Such confusions make it almost impossible for a validation from the IRS. Additionally, a big deduction mistake can occur when a taxpayer mixes business with pleasure by the subsequent use of the business telephone for private uses. With intensive scrutiny, the IRS would not validate such