|
  |
|
|
The 2 Words In Tax Deductions: Ordinary and Necessary
These two words form the mantra of deductible expenses. Ordinary This means exactly what it sounds like. Is the expense considering an ORDINARY cost of doing business? An ordinary expense in one industry might not be quite so ordinary in
another industry. Let's say you have a little hot dog stand. It's doing so well, you decide to take your spouse to Las Vegas for a holiday. You figure, HEY! Other businesses get to write off their trip to Las Vegas, right? Why not my hot dog stand? The guy staying in the room next to yours at the Bellagio is a travel writer for the New York Times, staying in town to write a piece for his next column. Which businessperson do you think has a better shot at a qualifying ordinary eduction? While this is an extreme example, you get the picture. The travel writer BELONGS in Las Vegas. The hot dog cart owner doesn't. Necessary This runs into a ton of gray when it comes to an IRS audit. What, in fact is necessary in the normal course of business operations. If an expense doesn't fall into the pile of obviously excludable items (usually of a personal nature), then it falls upon the business owner to prove that the expense is necessary for the continued operation of their enterprise. Again, one man's deduction can be another man's nightmare - at least on audit. A streetwalker could
likely be granted a deduction for the condom's she is constantly buying. A traveling salesman? good luck. A travel writer (they get ALL the good deductions, don't they?) would have no problem deducting the entire cost of a cruise - assuming they were doing a huge write-up of the cruise line for a major travel publication. The average cruiser - forget about it. If it's a business cruise, and regular business is conducted, then you have a fight on your hands. Is the cruise ship any different than a hotel? If the businessperson can deduct their stay in a hotel in Las Vegas or Hawaii, why not the business cruiser on a ship in the Carribean? Sometimes, it comes down to aggressiveness (or lack thereof) on the part of the tax professional. As well as the courts. The law can be very gray. The Bottom Line To avoid running afoul of your friendly neighborhood IRS agent, stick with the expenses that everyone else in your industry deducts. Industry publications and associations are great for learning the ropes, as is your tax professional. Pick one who has other clients in your industry and you'll have an advantage. |
|
 |
|
No reactions yet.
Please login or sign up to rate this intel.
Please login or sign up to add a comment.
The copyright for this content entitled "The 2 Words In Tax Deductions: Ordinary and Necessary" has been specified by the contributor as:
All Rights Reserved
This content may not be copied, distributed or adapted by anyone under any circumstances.
|
|
May, 2012
2008
January, February, March, April, May, June, July, August, September, October, November, December
2009
January, February, March, April, May, June, July, August, September, October, November, December
2010
January, February, March, April, May, June, July, August, September, October, November, December
2011
January, February, March, April, May, June, July, August, September, October, November, December
2012
January, February, March, April, May
|
|
Not a member yet?
Qondio is a powerful network for making it online. If you have a website to
promote, we can help.
Sign up and get in on the action.
|
|
Welcome to Qondio! Discover the awesome power this network can deliver by going to our About page. Or you could skip straight to the Sign Up form.
|
|
