What constitutes a trade or business expenses
Small
Business Accounting - what must a taxpayer show in order to treat expenditure
as a deductible trade or business expense? In order to deduct expenditure as a
trade or business expense, generally taxpayers must show:
• The existence of a
trade or business;
• A sufficient
connection between the expenditure and the trade or business;
• That the
expenditure was ordinary and necessary for the trade or business;
• That the expense
was incurred while the taxpayer was “carrying on the trade or business”; and
• That the
expenditure does not violate a specific public policy limitation.
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