Which type of expenses can typically be deducted as business expenses?

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The correct answer identifies ordinary and necessary expenses as the types of expenses that can typically be deducted as business expenses. This classification is central to determining what qualifies for a deduction under tax law.

Ordinary expenses are those that are common and accepted in the taxpayer's specific trade or business. Necessary expenses are deemed appropriate and helpful for the business operation. For example, a business's rent, utilities, supplies, and salaries are considered ordinary and necessary expenses because they are directly related to the function and success of the business.

In contrast, personal expenses are generally not deductible because they do not relate to business operations. Travel expenses may be deductible, but only if they meet the criteria of being ordinary and necessary to the business; thus, the option indicating only travel expenses is too restrictive. Excessive non-reimbursed expenses can also be problematic because they may not meet the threshold of what the IRS considers ordinary and necessary, making them ineligible for deduction.

Therefore, ordinary and necessary expenses comprehensively encapsulate what can be deducted, as they cover a wide range of legitimate business-related expenditures.

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