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Author: TMFExRO Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121061  
Subject: Re: Capturing a prior year business deduction Date: 1/25/2001 7:17 PM
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I had a $1,400 business expense that I paid out of pocket in Dec. 99. I was not reimbursed for it until Jan. 2000. Using the tips on this site, I had a lot of business expenses I took in 1999 to get over the 2% ceiling. I don't have enough this year to come close.

I was all ready to add $1,400 to income, on my 2000 return, as reimbursements from employer for business expenses deducted in a prior year. However, TurboTax is telling me I shouldn't do this unless the amount is more than my 2% AGI cut off for 1999. This expense alone was not more than my 2% AGI cut off in 1999 or this year.


My take on this is that you have a taxable recovery to the extent that you received a tax benefit. Thus, if your 1999 miscellaneous itemized deductions allowed after the 2% exclusion were more than $1,400, the entire $1,400 is taxable to you in 2000. If the actual amount deductible, after the exclusion, on the Schedule A was less, that lesser amount is your taxable recovery.

TMF ExRO
Phil Marti
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