Video Tips: Tax Implications of Lavish and Extravagant
The Internal Revenue Service (IRS) does not provide a strict definition of what is considered "lavish" or "extravagant" when it comes to business expenses. However, the Service does provide guidance that expenses must be "ordinary and necessary" for them to be deductible. An "ordinary" expense is one that is common and accepted in the taxpayer’s specific trade or business, while a "necessary" expense is one that is helpful and appropriate.
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