Criteria For Deducting Business And Investment Expenses Related to a profit- motivated activity Ordinary expenses Necessary expenses Reasonable expenses Properly documented An expense of the taxpayers(not someone elses expense)
Criteria For Deducting Business And Investment Expenses • Related to a profitmotivated activity • Ordinary expenses • Necessary expenses • Reasonable expenses • Properly documented • An expense of the taxpayers(not someone else’s expense)
General Restrictions on the Deductibility of Expenses Capitalization versus expense deduction Expenses related to exempt income Expenditures that are contrary to public policy · Other expenditures that are specifically disallowed
General Restrictions on the Deductibility of Expenses • Capitalization versus expense deduction • Expenses related to exempt income • Expenditures that are contrary to public policy • Other expenditures that are specifically disallowed