Revenue Ruling 92-29, 1992-1 C.B. 20, considers whether tax preparation fees
incurred by a sole proprietor are deductible on Schedule A of Form 1040 as a
miscellaneous itemized deduction, or whether these expenses are deductible in
determining adjusted gross income (on Schedule C, Profit of Loss from Business)
as a trade or business expense.1
Under the facts of the ruling, the individual pays
$500 to a tax return preparer. Of the $500, $200 is properly allocable to preparing
the Schedule C, with the remaining $300 properly allocable to preparing the rest of
the individual’s federal income tax return. The ruling holds that the $200 expense
for preparing Schedule C is deductible in computing adjusted gross income,
whereas the remaining $300 is deductible under section 212(3) as a miscellaneous
itemized deduction.
under current tax law the deduction under section 212(3) has been eliminated.
