Question

Robyn is a taxpayer painted her office, which she uses for her business purposes. She
has paid $7,000 to a professional painter to paint her office. As ‘part of the deal’ Robyn
receives a free holiday package worth $1,500 from the painting business. How much
deduction can Robyn claim and under which section?

book taxation law

Answer 1

Tax deductible expenses are almost any "ordinary, necessary, and reasonable" expenses that help to earn business income. Deductible expenses are those that can be subtracted from a company's income before it is subject to taxation. When it comes to what exactly is meant by ordinary, necessary, and reasonable expenses, the Internal Revenue Service (IRS) has defined these as any expenses that are "helpful and appropriate" for a business. The standard business deductions—which include general and administrative expenses, business-related travel and entertainment, automobile expenses, and employee benefits—are outlined in Section 162 of the Internal Revenue Code. Some expenses are considered "current" and are deducted in the year that they are paid, while others are considered "capitalized" and must be spread out or depreciated over time.  

In this case Robyn used the help of painter for painting her office. Printing expenses seems to ordinary, resonable and necessary. Hence she can claim expenses of USD 7000 as deduction under section 162 of the internal revenue code.