December 2, 2014 •
Ask the Experts – LD-2 Reports and Nondeductible Lobbying Expenses for Federal Income Taxes
Q. For federal income tax purposes, our organization has been using the aggregate amounts reported on our quarterly LD-2 lobbying activity report as our nondeductible lobbying expenses. Can the expenditures we compile for LDA reporting be used interchangeably for tax purposes?
A. In a word: maybe – It depends on the method of LDA reporting you’ve opted to follow. If you file your LD-2 report using the IRC definitions (method C), then the number you compile and report on your LD-2 can be used interchangeably for tax purposes. However, if you compile and report your quarterly lobbying expenditures using LDA definitions (method A), the results will not accurately reflect nondeductible lobbying expenses as defined by the IRS. Because the definition of “lobbying” differs between the LDA and the IRC, the two compilation methods will produce very different results. If you use LDA definitions to compile your quarterly LD-2, your organization must employ a second process by which to determine your nondeductible lobbying expenses for tax purposes. A lobbying registrant can determine each year which method they will use to compile the LD-2 report. Once a method has been selected, a registrant must use that method for all four quarterly reports during that year.
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