Ordinary and Necessary

Ordinary and Necessary in plain English

Ordinary and necessary is a general business expense concept used when evaluating whether a cost may be deductible.

Where Ordinary and Necessary shows up

Ordinary and necessary appears whenever an owner-operator is deciding whether a business cost may be deductible on Schedule C. Under the Internal Revenue Code, an ordinary expense is one that is common and accepted in the trucking industry, and a necessary expense is one that is helpful and appropriate for the business — not necessarily indispensable. Documenting the business purpose of each cost supports the position that the expense meets this standard. Costs that are primarily personal, lavish, or unrelated to trucking operations generally do not qualify.

Verify Ordinary and Necessary before filing

Definitions can depend on the form, tax year, or jurisdiction. Verify current official instructions before relying on a term for filing.

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