IRS Code 280E

In recent times, more than twenty-two states in the US have legalized marijuana. This is because marijuana has some health advantages and it can be used to treat patients suffering or in severe pain. Marijuana is prescribed to patients suffering from certain medical conditions such as Glaucoma, AIDS, and Cancer. IRS Code 280EAlthough these states have allowed the sale of marijuana, the drug is illegal under the federal law. Hence, the IRS Code 280E was promulgated to prevent retailers, producers, and processors of marijuana from removing expenses for the earnings. However, the IRS Code 280E is detected in the cannabis industry because it usually makes cannabis business owners determine the expenses that must be included in the cost of the goods sold out which will provide the kind of expenses that can be deducted and those expenses that cannot be deducted.IRS Code 280E
Furthermore, the problem that the taxpayers have been facing since the promulgation of the section is that there has been little direction on how to determine this. A couple of years ago, details on how this section can be applied were provided which has made it easy to determine the cost of goods sold since then. Lastly, the expenses that can be included are direct labor cost and material cost and indirect costs like repair, maintenance, utilities among others.

 


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