Question

All of the following expenses paid or incurred in the course of operating a business are deductible as business expenses except:________.
a. Political contributions.
b. Costs incurred by a public utility company in connection with an appearance at a public utility commission rate making hearing.
c. Reimbursements to job applicants in connection with interviews.
d. Penalty for nonperformance of a contract.

Answer 1

Answer: Political contributions

Explanation:

The expenses which are vital in running a business are deductible and examples of these are utility costs, legal services, salaries, office rent, equipment and supplies, utility costs, professional dues, etc.

Of the options given in the question, political contribution are not paid or incurred while running a business. Under Section 162(e), the political contributions are not deductible.