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Is Business Management Consulting tax deductible?

I can’t find anything specific on this, I need to know if Business consulting for an Auto Body shop would be tax deductible. Thanks so much to ANYONE with the answer!!

The textbook answer to the question, "What’s deductible?" is, "Any reasonable and necessary expense incurred in the production of taxable income."

Normally you’d bring in a consultant to help improve your business procedures with the intent of turning a greater taxable profit either through the generation of additional income or the reduction of expenses or both. That easily passes the "necessary" test.

Reasonableness is a bit more subjective but unless it’s obviously excessive for the size of the business or the amount revenue involved then it should normally pass that test as well. If you paid a consultant $10,000 and your business generates $250k in revenues that wouldn’t be challenged. If you paid him $100,000 that might not be reasonable at first look but if it enabled you to run your revenues up to $1,000,000 in a couple of years it might still be reasonable given all of the facts at hand.

This entry was posted on Monday, February 8th, 2010 at 3:55 am and is filed under management consulting. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

2 Responses to “Is Business Management Consulting tax deductible?”

  1. yes
    References :

  2. The textbook answer to the question, "What’s deductible?" is, "Any reasonable and necessary expense incurred in the production of taxable income."

    Normally you’d bring in a consultant to help improve your business procedures with the intent of turning a greater taxable profit either through the generation of additional income or the reduction of expenses or both. That easily passes the "necessary" test.

    Reasonableness is a bit more subjective but unless it’s obviously excessive for the size of the business or the amount revenue involved then it should normally pass that test as well. If you paid a consultant $10,000 and your business generates $250k in revenues that wouldn’t be challenged. If you paid him $100,000 that might not be reasonable at first look but if it enabled you to run your revenues up to $1,000,000 in a couple of years it might still be reasonable given all of the facts at hand.
    References :

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