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Can a Trade or Business Expense Be Deductible If It

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Essay

Can a trade or business expense be deductible if it is necessary but not ordinary?


Definitions:

Cost Method

An accounting method used for investments, where the investment is recorded at cost and earnings from the investment are recognized only when dividends are received.

Retained Earnings

The portion of a company's profit that is held or retained and not paid out as dividends to shareholders.

Common Shares

A type of equity investment representing ownership in a corporation, with rights to dividends and voting at shareholder meetings.

Equity Method

An accounting technique used by firms to assess the profits earned by their investments in other companies, by reporting these profits as income.

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