DEFINITION of 'Special Item'

A large expense or source of income that a company does not expect to recur in future years. Special items are reported on the income statement and are separated out from other categories of income and expenses so investors can more accurately compare the company's numbers across accounting periods. Examples of special items include extraordinary expenses, restructuring charges, gains from the elimination of debt and earnings from discontinued operations.

BREAKING DOWN 'Special Item'

There is a bias toward assuming that special items are used to manipulate investors. However, special items are often legitimate, and it is normal for businesses to occasionally experience one-time events that are not expected to have an ongoing effect on income. However, if a company reports special items on its income statement year after year, this can be a red flag for investors because not only do the recurring special items make it difficult to gauge the company's performance across time, but they also indicate instability in the business.

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