Examples of direct costs may include: production employee wages, supplies consumed directly in the production process, and costs of consultants used in producing the finished product. In general, direct costs are those costs that directly benefit one specific project or good that is being produced. Because of this variability, the determination of direct costs relies, in part, on the taxpayer's accounting records. There are no specific examples of direct costs provided in the statutes because not every business operation will account for direct and indirect costs in the same manner. This includes depreciation expense computed under the IRC in effect for Wisconsin that are classified as direct costs. Is the federal or Wisconsin depreciation expense used when computing the credit?ĭirect costs include all of the ordinary and necessary expenses paid or incurred during the taxable year in carrying on the trade or business that are deductible as business expenses under the IRC and identified as direct costs in your managerial or cost accounting records.
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