Deductible vs Non-Deductible Business Expenses
Lesson:
Businesses spend a lot of money. Some of it is deductible, some of it isn't.
Getting a feel for which is deductible is crucial to understanding the tax responsibility of a firm.
You're a tax accountant, looking through a firm's list of expenses.
Here's what you know:
- $104 for salary paid to non-others
- $176 for governmental fines
- $296 for office expenses
How much of the expenses is considered deductible?
Answer:
- The total for deductible expenses is $400.00.
Explanation:
- Governmental fines are not deductible at all.
TOTAL DEDUCTIBLE EXPENSES = $176 * 0% - Salary paid to non-others are fully deductible. Let's increase our deductible by the full amount ($104).
TOTAL DEDUCTIBLE EXPENSES = $176 * 0% + $104 * 100% - Office expenses are fully deductible. Let's increase our deductible by the full amount ($296).
TOTAL DEDUCTIBLE EXPENSES = $176 * 0% + $104 * 100% + $296 * 100%