Reference no: EM133291514

Business expenses are the cost of carrying on a trade or business. These expenses are usually deductible if the business operates to make a profit.

Section 162(a) of the Internal Revenue Code defines business expenses as the ordinary, necessary, and reasonable expenses of carrying on a trade or business. The term "necessary" for tax purposes has a wider definition than that found in common usage today. The expense does not have to be "absolutely necessary" in the sense that it is "indispensable" to carrying on the business. It only needs to be helpful to one's business as well as appropriate for one's business. For instance, leasing an office space is certainly helpful to the practice of a CPA, providing a place for the CPA to meet with clients. However, it is not absolutely necessary for a CPA to conduct his trade, since many sole-proprietor CPAs work out of their home or provide their services at their clients' places of business.

Provide examples of business expense that meet the criterion.