Deductible Expenses

The Internal Revenue Service defines a business expense as ‘ordinary’ and ‘necessary’. Ordinary expenses are those costs typically incurred in your industry. So a restaurant would not ordinarily purchase vaccines. And a medical practice would not purchase 50 heads of lettuce. So it is important to understand the concept of ordinary. Necessary expenses are those costs you must incur to fulfill your mission or purpose as a business operation.

Hobbies – Business Perspective and Tax Compliance

Hobbies

Many people turn their hobbies into a business operation.  Not so much to make a living or make big profits, but more to help offset the costs of the hobby.  Whenever you go to one of those community fairs, the vendors at the respective booths are mostly folks selling a product that is direct outcome of their hobby.  The bands that play on stage, they make some money, but never enough to offset the cost of instruments, gear and transportation.  But they enjoy entertaining folks and they hope someday they’ll get discovered. 

This content is for Bronze, Silver, One-Time and Contractor's Diagnostic members only.
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Internal Revenue Service (IRS) Definition of an Expense

The Internal Revenue Service defines a business expense as ‘ordinary’ and ‘necessary’.  Ordinary expenses are those costs typically incurred in your industry.  So a restaurant would not ordinarily purchase vaccines.  And a medical practice would not purchase 50 heads of lettuce.

This content is for Bronze, Silver, One-Time and Contractor's Diagnostic members only.
Log In Register
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