Medical Marijuana: Treatment of Deductions For Expenses in Business Legalized Under State Laws
Recently, the provisions of Internal Revenue Code section 280E are being applied by the Internal Revenue Service (IRS) to businesses operating in the medical marijuana industry. Even though 18 states have medical marijuana laws (and two of those states now allow marijuana to be consumed without a doctor recommendation), the IRS is applying section 280E to deny otherwise valid business deductions. Businesses operating legally under state law argue that section 280E should not be applied because Congress did not intend the law to apply to businesses that are legal under state law. The IRS asserts that it was the intent of Congress to apply the provision to anyone "trafficking" in a controlled substance, as defined under federal law. Thus, section 280E is at the center of the conflict between federal and state laws with respect to medical marijuana.
Read more about this topic: Taxation Of Illegal Income In The United States
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