To be deductible, the dominant motive for incurring an expense must be
A)the relationship to a business activity.
B)to reduce income taxes.
C)tax avoidance.
D)the intent to earn a profit.
E)personal.

Question

Quizplus · Accepted Answer

The dominant motive for incurring an expense must be to earn a profit in order for it to be deductible. If the primary purpose of the expense is personal or for tax avoidance, it is not deductible. The relationship to a business activity is important, but it is not the only factor in determining deductibility. Similarly, the desire to reduce income taxes is not sufficient to make an expense deductible if it is not also incurred for a profit-oriented purpose.

To Be Deductible, the Dominant Motive for Incurring an Expense