business (noun, busi-ness, \ ˈbɪznəs \) purpose (noun, pur-pose, \ ˈpɜːrpəs \) rule (noun, rule, \ ruːl \)
Definition: a) is a taxation principle stating that if a company claims an expense should be legally deducted from its taxable income, then that expense has to serve a legitimate business purpose. If a company breaks this rule by trying to pose a non-business expense as a business purpose one, it will suffer from legal consequences.
b) is an expression meaning that the primary purpose of a company’s representative trip out of town is to conduct business operations with clients or business partners.
In a Sentence:
- Under the new regulations of the business purpose rule, the company’s utility bills fall under it and can be deducted from our taxable income. This will help us save a substantial amount of funds each year and invest them in new equipment for our office.
- It’s ridiculous that you thought that the business purpose rule would apply here. Your new car can’t be counted as a business expense just because you use it to drive to work.
Synonyms and related words: business rule, business purpose, business judgment rule, business requirement
