The tax code, specifically Section 162(a), allows businesses a tax deduction for “ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business.” The hitch is that the expenses must be business related and properly substantiated. In one case, the U.S. Tax Court ruled that a married couple wasn’t entitled to business tax deductions because the husband’s consulting company failed to show that it was engaged in a trade or business. In fact, invoices produced by the consulting company predated its incorporation. And, the court ruled, even if the expenses were legit, they weren’t properly substantiated. (TC Memo 2023-80). Contact us with questions. © 2023
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