IRS Publication 535 - Business Expenses

AAA

DEFINITION of 'IRS Publication 535 - Business Expenses'

A document published by the Internal Revenue Service (IRS) that provides guidance on what types of business expenses are and are not deductible. IRS Publication 535 covers the rules for deducting business expenses, and outlines the most common items taxpayers deduct.


In order to be deductible, a business expense must be considered both ordinary and necessary. "Ordinary" expenses are ones that are common in a particular industry, and "necessary" expenses are those that are helpful to conducting business. Cost of goods expenses, personal expenses and capital expenses are distinguished from business expenses, meaning that deducting costs from receipts in order to determine profits precludes those costs from also being deducted as a business expense. Capital expenses have to be capitalized rather than deducted.

INVESTOPEDIA EXPLAINS 'IRS Publication 535 - Business Expenses'

The IRS publishes a number of documents that provide additional information on business expenses: Publication 334 (Tax Guide for Small Business), Publication 463 (Travel, Entertainment, Gift and Car Expenses), Publication 525 (Taxable and Nontaxable Income), Publication 529 (Miscellaneous Deductions) and Publication 587 (Business Use of Your Home).


Certain types of business expenses, such as capital expenses, are treated differently than ordinary and necessary expenses. These will likely require the taxpayer to use different tax forms. The accounting method employed by the taxpayer determines when expenses can be deducted.

RELATED TERMS
  1. Form 2106-EZ: Unreimbursed Employee ...

    A tax form distributed by the Internal Revenue Service (IRS) ...
  2. IRS Publication 334: Tax Guide ...

    A document published by the Internal Revenue Service (IRS) that ...
  3. IRS Publication 463: Travel, Entertainment, ...

    A document published by the Internal Revenue Service that provides ...
  4. Internal Revenue Service - IRS

    A United States government agency that is responsible for the ...
  5. Capitalize

    An accounting method used to delay the recognition of expenses ...
  6. Business Expenses

    Any expenses incurred in the ordinary course of business. Business ...
RELATED FAQS
  1. In what types of economies are regressive taxes common?

    Regressive taxation systems are more likely to be found in developing countries or emerging market economies than in the ... Read Full Answer >>
  2. What's the difference between regressive and progressive taxes?

    The U.S. federal tax system and local and state tax systems are complex in that they combine progressive, regressive and ... Read Full Answer >>
  3. How do businesses determine if an asset may be impaired?

    In the United States, assets are considered impaired when net carrying value (book value) exceeds expected future cash flows. ... Read Full Answer >>
  4. What are the differences between regressive, proportional and progressive taxes?

    Tax systems fall into three main categories within the tax code: regressive, proportional and progressive taxes. Regressive ... Read Full Answer >>
  5. How can I set up an accrual accounting system for a small business?

    First, determine whether accrual accounting makes the most sense practically and financially. If the small business is also ... Read Full Answer >>
  6. What causes politicians or governments to begin "pork barrel" spending?

    Pork barrel spending occurs when the government taxes the general population to hand out concentrated benefits to special ... Read Full Answer >>
Related Articles
  1. Taxes

    Before You Visit Your Tax Preparer: Do This

    The earlier you start preparing your tax records and documents, the more likely you are to have a smooth tax return experience – and all the tax benefits you're due.
  2. Entrepreneurship

    Tax Credit For Plan Expenses Incurred By Small Businesses

    Determine whether your business is eligible to claim a tax credit for establishing a retirement plan.
  3. Taxes

    Surviving The IRS Audit

    Keeping thorough records and knowing the penalties make this experience easier than you'd expect.
  4. Taxes

    Small Business Tax Obligations: Payroll Taxes

    Don't leave it up to your accountant - owners are ultimately responsible for fulfilling tax obligations.
  5. Taxes

    10 Most Overlooked Tax Deductions

    The receipts you cram into your wallet could be replaced with cash come tax season.
  6. Entrepreneurship

    Plans The Small-Business Owner Can Establish

    Don't hesitate to adopt a smart plan for you and your employees.
  7. Economics

    Explaining Cash On Delivery

    Cash on delivery, also referred to as COD, is a method of shipping goods to buyers who do not have credit terms with the seller.
  8. Entrepreneurship

    What is Unlimited Liability?

    Unlimited liability means that the owners of a business are liable for the entire amount of debt and obligations of that business.
  9. Economics

    How The GDP Of The US Is Calculated

    The US GDP may not be a perfect economic measure, but the ability to compare it to prior periods and other countries makes it the most applicable.
  10. Entrepreneurship

    The Story Behind Google's Success

    An ongoing commitment to innovation and rapid iteration drives Google's ongoing success.

You May Also Like

Hot Definitions
  1. Expected Return

    The amount one would anticipate receiving on an investment that has various known or expected rates of return. For example, ...
  2. Carrying Value

    An accounting measure of value, where the value of an asset or a company is based on the figures in the company's balance ...
  3. Capital Account

    A national account that shows the net change in asset ownership for a nation. The capital account is the net result of public ...
  4. Brand Equity

    The value premium that a company realizes from a product with a recognizable name as compared to its generic equivalent. ...
  5. Adverse Selection

    1. The tendency of those in dangerous jobs or high risk lifestyles to get life insurance. 2. A situation where sellers have ...
Trading Center