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Federal Income Tax

Deductions for Business and Investment Expenses

Deductions for Business and Investment Expenses

Learn about allowed deductions for the costs of doing business or producing income.


Introduction and General Rule

In this lesson, we'll survey the deduction for ordinary business expenses under Section 162(a) of the Internal Revenue Code, or IRC.

Section 162(a) allows a deduction for, quote, "ordinary and necessary expenses paid or incurred during the taxable year in carrying on a trade or business," unquote. This language gives us five discrete elements.

Ordinary and Necessary Expenses Paid or Incurred During the Taxable Year

First, the expense must be ordinary. Primarily, ...