If you itemize deductions, you may deduct contributions of money or property made to the following types of organizations qualified under section 170(c) of the Internal Revenue Code:

  • A state or United States possession, or the United States or the District of Columbia, if made exclusively for public purposes;
  • A community chest, corporation, trust, fund, or foundation organized and operated exclusively for charitable, religious, educational, scientific, or literary purposes, or for the prevention of cruelty to children or animals;
  • A church, synagogue, or other religious organization;
  • A war veterans’ organization or its post, auxiliary, trust, or foundation organized in the United States or its possessions;
  • A nonprofit volunteer fire company;
  • A civil defense organization created under federal, state, or local law;
  • A domestic fraternal society, operating under the lodge system, but only if the contribution is to be used exclusively for charitable purposes;
  • A nonprofit cemetery company if the funds are irrevocably dedicated to the perpetual care of the cemetery as a whole and not a particular lot or mausoleum crypt.

Your deductions are generally limited to 50% of your adjusted gross income.  Certain types of property donations and donations to certain organizations may be limited to 20% or 30% of adjusted gross income.

If you receive a benefit from your donation, for example a dinner, you can only deduct the amount that exceeds the value of the benefit received.

Records must be kept to prove the amount of contributions that you claim on your tax return.  In order to substantiate a cash contribution, you must keep one of the following:

  • A bank record that shows the name of the qualified organization, the date of the contribution, and the amount of the contribution.
  • A receipt from the qualified organization showing the name of the organization, the date of the contribution, and the amount of the contribution.
  • Payroll deduction records.

You can claim a deduction for a contribution of $250 or more only if you have an acknowledgment of your contribution from the qualified organization.  If you made more than one contribution of $250 or more, you must have either a separate acknowledgment for each or one acknowledgment that lists each contribution and the date of each contribution and shows your total contributions.

For non-cash contributions, the record keeping requirements vary depending on the fair market value of the contribution.  See IRS Publication 561 for more information.

As always, this is only meant as a brief overview.  If you feel that we can be of further assistance to you, please contact our office to set up an appointment.

Email us at: [email protected]

Call us at: 302-239-3500

Visit our website: http://www.dohertyandassociates.com

– Doherty & Associates Team

Bitcoin and other virtual currencies are becoming more popular by the day.  Retailers such as Overstock.com are now accepting bitcoin as payment.  As of the end of 2013 it is estimated that over one million people owned bitcoins.

In March of this year, the IRS issued Notice 2014-21 which addresses the tax consequences of Bitcoin and other virtual currencies.

These currencies will now be treated as property for tax purposes.  Generally you will have gain or loss when you exchange of virtual currency for other property.  If the fair market value of property that your receive in exchange for virtual currency exceeds your basis, you have a taxable gain. You have a loss if the fair market value of the property received is less than your basis in the virtual currency.

If you take bitcoin or any other virtual currency in the ordinary course of business, you must include in your gross income, the fair market value of the virtual currency, measured in U.S. dollars, as of the date that the virtual currency was received.

For more information in question and answer format you can go to:


As always, this is only meant as a brief overview.  If you feel that we can be of further assistance to you, please contact our office to set up an appointment.

Email us at: [email protected]

Call us at: 302-239-3500

Visit our website: http://www.dohertyandassociates.com

– Doherty & Associates Team

If you are contemplating expanding your business into more than your home state, there are several factors to consider.

Do I need to register in the other states?

The answer to this (like so many other tax questions) is it depends.  If you have a physical presence in another state, e.g. a retail location, then you must register.  If your business is conducted online from you home base, chances are that you don’t need to register with other states.

Do I have to collect sales taxes?

Again the answer is it depends.  If you have a physical presence in a state that has a sales tax, you generally are liable for collecting the tax from your customers. Different states have different definitions of physical presence and also have different definitions of what is considered a taxable sale.  In some states, however, you do not even need a physical presence in order to be liable for sales tax.

Do I have to pay income taxes to other states?

The large majority of states have an income tax.  If you have a presence in that state (again the definition varies by state) then you will be subject to income tax on the amount of income that is apportioned to that state.  The formulas for determining apportioned income vary by state.

Do I need to do anything differently if I am an S Corporation?

Most states do not require a separate election to be treated as an S Corporation.  If you have a valid Federal election, the state will treat you as an S Corporation.  Some states, however, require a separate S election (New Jersey for one).

If you are planning to expand your business into other states, it is extremely important that you are properly set up to conduct business in those states before you start conducting business there.  If you are not set up properly it can be costly.  For example, New Jersey charges a fee per year for a late filed S election.  There could be penalties and other inconveniences such as delayed refund.

As always, this is only meant as a brief overview.  If you feel that we can be of further assistance to you, please contact our office to set up an appointment.

Email us at: [email protected] or Call us at: 302-239-3500.

– Doherty & Associates Team


Many people who are just getting involved in real estate investing are spending large amounts of money on real estate education classes. The question is not are these classes worthwhile, but whether or not these expenditures are deductible.

Several factors must be considered before this question can be answered.

  • Are the expenses “ordinary and necessary” under Internal Revenue Code Section 162?
  • Is the business a “functioning” entity?
  • Does the training qualify you for a new trade or business?
  • IRS also has additional restrictions for deducting work related education.

Ordinary & Necessary
To be considered ordinary, an expense must be usual or customary in a particular trade or business. An expense is necessary if it is appropriate and helpful for the development of the business.

Functioning Entity
A business is not considered a functioning entity until it is performing the activities for which it was organized.

New Trade or Business
If the training qualifies you for a new trade or business, i.e., real estate investor, instead of maintaining or improving skills required in an ongoing business, then it is a non-deductible personal expense.

Additional IRS Restrictions

To quote the IRS, “In order to deduct work related education expenses, they must meet at least one of the following tests:

  • The education is required by your employer or the law to keep your present salary, status, or job. The required education must serve a bona fide business purpose of your employer.
  • The education maintains or improves skills needed in your present work.

However, even if the education meets one or both of the above tests, it is not qualifying work-related education if it:

  • Is needed to meet the minimum educational requirements of your present trade or business, or
  • Is part of a program of study that will qualify you for a new trade or business”

A 2009 tax court case (Woody v. Commissioner, TC Memo 2009-93), is a good illustration of these requirements. Despite taking courses, getting an EIN, obtaining a loan, getting credit cards in the business name, and actively marketing his business, the court determined that Mr. Woody was not “actively engaged” in the real estate investment business until he acquired and rented his first property. The more than $21,000 that he spent for classes was ruled a non-deductible personal expense. This case illustrates the importance of having a functioning business before incurring education expenditures, otherwise they may not be deductible.

This is only a brief overview. Everyone’s situation is different. As with most tax related issues, the deductibility of educational expenses is determined on a case by case basis.

Please consult a qualified tax professional before you set up your real estate business. If you feel that we can be of service to you, please contact our office to set up an appointment.

Email us at: [email protected] or Call us at: 302-239-3500.

– Doherty & Associates Team

By law real estate rental is a passive activity. Passive losses are only deducible to the extent that they offset passive income.  Additionally, passive rental income can be subject to the new 3.8% tax on net investment income.  There is a special provision that allows individuals to deduct up to $25,000 of rental losses.  However, this provision is phased out between $100,000 and $150,000 of adjusted gross income.  A real estate professional’s rental income is non-passive, meaning losses can offset any type of income, not just passive income.

To qualify as a real estate professional:

  • More than half of the personal services that you perform during the year must be in real estate trades or businesses.
  • You must spend more than 750 hours in your real estate trades or businesses.

This is just a brief overview and does not cover all of the intricacies involved in qualifying as a real estate professional. Please contact our office to set up an appointment to explore what is right for your situation.

Email: [email protected]

Phone Number: 302-239-3500


If you are a business owner, you must be aware of important tax changes that could impact your company finances. While many tax rules are permanent, others are written to expire at some point in the future. Some are extended and given new deadlines, but a significant number of popular “extenders” terminated at the end of 2013, including both business credits and deductions. Here are a few changes:

  • Bonus 50% first-year depreciation will no longer be available to your business in 2014 and beyond.
  • Section 179 expensing limit, which allows you to deduct qualified costs immediately instead of expensing them over time, will tumble to $25,000 from $500,000, where it’s been for the last four years.

How will the end of these and other credits or deductions affect you? Contact Doherty & Associates so we can give you advice and planning recommendations that you’ll need to minimize your tax bill and enhance your business’s financial situation. Also follow us on Facebook, Twitter, and LinkedIn and stay up to date on the changing tax laws, credits, and deductions.

Doherty & Associates Team

PRWeb recently recognized Doherty & Associates for our first fundraiser for The Ronald McDonald House of Delaware.

Debria Doherty, Doherty & Associates President & CEO, summarized it best when she said, “It is very heartwarming to offer support to families that are experiencing one of the most traumatic events in their lives. I am very proud of the Doherty & Associates’ staff and all others who gave of themselves to make this event successful. It was truly a team effort!”

We are honored to be recognized by PRWeb and are excited for future charity events to come!

Click here to read the full article.

Team Pic Feb 5

Home offices have been increasingly growing and employees who work at home represent a growing segment of the work force.  If your home office is used exclusively and regularly for business purposes you should be aware that the IRS has created a “simplified option” for calculating the deduction for the business use of your home.  

Highlights of the simplified option:

  • Standard deduction of $5 per square foot of home used for business (maximum 300 square feet or $1,500).
  • Allowable home-related itemized deductions claimed in full on Schedule A. (For example: Mortgage interest, real estate taxes).
  • No home depreciation deduction or later recapture of depreciation for the years the simplified option is used.

Keep in mind there are good and bad aspects to this “simplified” method.  The new method gives you back your full interest and tax deduction on schedule A, but you will lose your depreciation and loss carryover deductions.

While this may be a welcome relief for some taxpayers, is it the right choice for you? Please email us at: [email protected] or call us at 302-239-3500 so we can answer all your financial questions.

If you are interested in investing in real estate, you should attend the “Smart and Clean” Real Estate Investing Event—sponsored by DELREIA on Saturday, Jan 25th, 2014. Go here to watch a short video that explains what the event is all about and how to get registered!

Additional details about the event are below. We hope to see you there! – Doherty & Associates Team


Saturday January 25th, 2014 @ 9:00am – 4:00pm


Sheraton Wilmington South
365 Airport Road, New Castle, DE 19720

Tickets for the all-day event (meals & snacks included) are $115.00.  As a Doherty & Associates client you are entitled to a discount.   The price will then be $99.00 instead of $115.00 when registering by using the discount code of ‘doherty‘. Click here to register! 

Special Admission Price:  50% off for advisors – Bring your CPA, attorney, and financial advisors for 50% off the full ticket price.    Call for further details at 877-395-1290. 

Preview of the Workshops

Part 1: “Why Invest in Notes or create them as a Private Lender? Why use IRA money?” 

  • Learn mortgage note investing strategies and why so many investors have turned to buying notes instead of properties. Dave Van Horn from PPR will be presenting on “How to Utilize IRAs to Raise Capital and Invest in Notes.” ALSO, learn how to evaluate and financially back, secured real estate projects. BIG returns without the headaches of dealing with property or tenants! Do these through your self-directed IRA and you have a beautiful marriage of strategies!

 Part 2: “Advanced IRA Strategies for Real Estate and Note Investors” 

  • Because it’s not what you make, it’s what you keep, that counts… Learn how to make tax free income for life for you and your heirs. Implement strategies to increase returns on your real estate and note investments by 20 to 50%! Compound growth without taxes through a self-directed IRA is simple but powerful. Carl Fischer, former NASA rocket scientist and founder of CamaPlan – Self Directed IRA (SDIRA )will be presenting advanced SDIRA strategies and case studies.

As the holidays are winding down and the New Year is upon us, I wanted to take a moment to give a special ‘Thank You’ to those who supported and contributed in Doherty & Associates First Annual Ronald McDonald House of Delaware Charity Benefit last month. Giving back to the community is deeply ingrained in our company’s culture as we believe it only helps make our communities stronger.

I am happy to report that our benefit raised over $35,000 in charitable donations! Your contributions ensure that families can afford to stay with their children during treatment and recuperation at the Ronald McDonald House of Delaware. These home-like facilities offer families lodging, meals, therapy sessions and much more, to help nurture their children back to health.

This was made possible because of wonderful people like you who contributed with your time and generous donations.  A huge thank you to our Gold Sponsors listed below who helped make this fundraiser an even bigger success!

  • Agents and Corporations, Inc.
  • Bachetti Bros. Catering
  • Comfort Keepers
  • Deerfield Wines
  • Delaware Chiropractic
  • Delaware Real Estate Investors Association
  • Equity Builder Home Improvements, Inc.
  • Food for Thought Catering
  • Frank Ingraham
  • Hammerheads
  • Hockessin Athletic Club
  • Joe Lumi, LLC
  • Lassen Marine & Webster Insurance
  • Mike & Nick’s Italian Grill & Sports Bar
  • Minster’s Jewelers
  • N & G Enterprises, Inc.
  • Pat & Annie DelleCave
  • Poured Foundations of Delaware, Inc.
  • Premier Planning Group, Inc./Mike Polin
  • Rick Sexton
  • Skyline Grill
  • Tony’s Café

To learn more, please click here. We look forward in your continued support in October 2014, at our Second Annual Ronald McDonald Charity Benefit!

With sincere thanks and appreciation,

Debria G. Doherty


Doherty & Associates, Inc.