What are "ordinary and necessary" business expenses?;

              maximum—then consideration should be given to dividing the income
with other entities, by utilizing trusts, multiple corporations, or having
income taxed to low-income members of the family. The Subchapter
S election offers a special statutory method of having income taxed to
the most advantageous entities.
We should keep in mind that any reductions of taxes we help our
clients accomplish by planning save "100-cent dollars"—any costs of
the planning are deductible, so are paid with "9-cent" to "80-cent"
dollars, depending on tax brackets.
Durwood L. Alkire
Seattle
Durwood L. Alkire has a B.A. from the Univer­sity
of Washington and is a partner in our Seattle
Office. He is active on committees of the Seattle
Chamber of Commerce, the Municipal League of
Seattle and King County, and the United Good
Neighbor Fund.
I
What Are ^Ordinary ank
Reviewed by John S. Crawford, Portland
ONE OF THE RESULTS of high income tax rates has been the im­portance
placed upon the deductibility of expenditures made by
individuals as well as by business entities. Ordinary and necessary ex­penses
meet the tests of deductibility. The problem faced by tax prac­titioners
and businessmen is that of distinguishing expenditures which
qualify as ordinary and necessary from those which do not. The
theme of the subject book is to differentiate for the reader the ex­penditures
which qualify from those which do not and to point up
ways of assuring that proper deductions are not lost by careless record
keeping or lack of proof. The authors commence with the general
rule that Congress intended the income tax laws to tax earnings and
34 THE QUARTERLY