Two words that spell check Deductible - 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 man remains in the room next to you at the Bellagio is a travel writer for The New York Times, live in the city to write a piece for the next column. What business do you think a better chance to a quality standard deduction? While this is an extreme example, you get the picture. The travel writer belongs in Las Vegas. The Hot Dog Cart Ownership not.

Necessary

This amounts to a ton of gray when it comes to an IRSTest. What is needed, in fact, in the normal course of business. If a cost is not clearly ruled out in the crowd, fall items (usually of a personal nature), then it falls on the employer to prove that the costs necessary for the continued operation of their business. Again, a man can prints another man's nightmare - at least in the revision. A prostitute could probably be granted a deduction for the condom he or she everbuying. 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 Hotels in Las Vegas or Hawaii, why not the business Cruiser on a ship in the Caribbean? Sometimes it is about aggression (or lack thereof) on the part of the tax professional. As soon as the courts. The law is very gray.

The Bottom Line

To avoid running into conflict with your friendly neighborhood IRS agent to keep spending, which draws all others in your industry. Publications and industry associations are for learning the majorRope, as your tax professional. Choose one of the other customers in your industry and you will have an advantage.