Summary: Today TaxMama® hears from John in the TaxQuips Forum, with this quick question. “Can a new marijuana business in CO and WA declare business deductions on a federal tax return?” Good question John. Clearly, they can on the state return. But since marijuana is illegal on a federal scale? Typically the IRS does not permit deductions on illegal income. Do some searching of the Tax Court cases to see if anything has come before them. Well, I did some searching. While I was answering, Lori Thompson, EA of KTJTax.com was also looking up the same information – and we both conclude – based on Tax Court cases, under IRC Section 280E, you may not deduct expenses related to trafficking of a controlled substance. And remember, you can find answers to all kinds of questions about marijuana and other tax and business issues, free. Where? Where else? At www.TaxMama.com. [Note: If you were subscribed to the e-mailed version of TaxQuips, you’d be getting other exciting news and tips by e-mail, that never appear on the site. Please click on the join TaxMama.com link – it’s free!] Please post all Comments and Replies in the new TaxQuips Forum .
