Enrolled Agent Exam [Part 2] 37, Ordinary and Necessary Expenses — §162

This podcast is made by Ran Chen, who holds an EA license, Insurance and Securities licenses (Series 6, 63, 65), and the CFP® designation. He is passionate about opening access to high-quality exam preparation resources and helping learners prepare more effectively for professional certification exams. In this episode you will learn: - The two-prong test for deductibility: an expense must be both ordinary (common in the trade) and necessary (helpful and appropriate). - How the unwritten "reasonable in amount" rule prevents deductions for lavish or extravagant expenses. - The critical difference between a currently deductible repair and a capital expenditure that must be depreciated over time. - Why expenses that violate public policy, such as government fines, penalties, and illegal payments, are never deductible. - Common exam traps involving personal expenses disguised as business costs and how to identify the primary purpose of an expense. For more free exam prep tools, practice questions, and AI-powered explanations, visit https://open-exam-prep.com/ or YouTube Channel: https://www.youtube.com/@Open-exam-prep