 Most of this information comes from the Tax Guide for Small Business for Individuals who use Schedule C Publication 3-3-4 Tax Year 2022. You can find on the IRS website, irs.gov, irs.gov, looking at the income tax formula focused online. One, remember in the first half of the income tax formula is in essence an income statement, although just an outline of scaffolding other forms and schedules flowing into these line items. What are those forms? The Schedule C, having business income minus business expenses. The net business income from the Schedule C flowing into line 1 income of the income tax formula. Looking at the first page of the Form 1040, noting the Schedule C flows into the Schedule 1, which flows into page 1, Form 1040, line number 8. The Schedule C, as the profit or loss from business has an income statement format of income and expenses. We're focusing in on the expenses, but this time we're not talking about what you can deduct, but what you cannot deduct. So remember the general rule from the IRS's perspective. Everything is basically income, unless they say otherwise the income that you have you need to then determine whether what kind of income is it business income or some other kind of income. And then on the expense side of things, when we're talking about business expenses, we follow a pretty natural kind of conceptual concept, which is that the expenses that you can deduct are those that are ordinary and necessary in order to generate the revenue. Because when you have an income tax type of system, it makes sense to tax people on the net income, not on the gross income. So that's the general idea, but you might have some things down here where you're saying, hey, look, I have an ordinary and necessary business expense down here. It just happens to be an illegal one or something like that, like a bribe, which is quite common in other kinds of countries and possibly in the United States too. I don't really know. But you would think if that's part of the way of business is done, that you have to do that in order to do your business. But it's not legal, right? So you would think you're going to have restrictions against some types of expenses, even though they might be ordinary or necessary, possibly because they're not legal or because if they were to be allowed to be deductions, they're going to further incentivize corruption, like political corruption and that kind of stuff. So let's go into some of those items. What can't you deduct then? Expenses you cannot deduct. You usually cannot deduct the following as business expenses. For more information, you can see publication 535, so bribes and kickbacks. Now, this seems standard. You would say, well, of course, I don't do bribes and kickbacks in my business. If you're working in a legitimate kind of place in the United States and you're running an honest business here, but in some kind of businesses, especially in other countries, bribes and kickbacks, unfortunately, is the political environment of the situation. And some would argue that in some areas in the United States, you have somewhat equivalent situations at times as well. So then you could argue, well, there would be ordinary and necessary kind of business expenses, but no, they're illegal, so you can't deduct the bribes and kickbacks. It would be the general idea because they're bribes and kickbacks. So then you've got the charitable contributions. Now, charitable contributions, when you're talking about the Schedule C, normally you might be able to deduct charitable contributions, but usually you would think about them as possibly being deductible on the Schedule A. And only then, if usually you are able to take the itemized deduction as opposed to the standard deduction would be the general kind of deductibility of charitable contributions usually. So they're not really business expenses. In other words, and again, some people would argue, you would say, well, I gave money from my sole proprietorship to the charity as part of my business concept or something like that or to look good. And obviously businesses do that sometimes, but it's not really a charitable contribution. Then it sounds like you're basically paying for advertising or you're paying to look good. You're paying for that, which is clearly businesses do that kind of thing, but the charitable contributions usually you would think not business, but possibly deductible. It's personal. That means that you might take the money out of the business and then give it to charity maybe and possibly get a deduction on the Schedule A itemized deductions. So demolition expenses or losses and dues to business, social, athletic, luncheon, sporting, airline and hotel clubs. So these are kind of things that sound kind of like personal. If you're giving money for dues for clubs and stuff like that, people have tried to set up these kind of clubs that's looking off. It's one of those situations again where you could argue that it's business related, but it seems kind of over the top and that would be similar to when you're driving the fancy car and saying that you're just trying to do it for business purposes to get from A to B, but you could have got from A to B in a $30,000 car and you're driving a $200,000 car or something like that. So with the mingling situation, you're like, I got to build in my network because that's my business network and stuff, but your network seems to be a pretty personal social club at the golf course and stuff. So it seems like a little too much. You can see where this line always, these lines become kind of confusing when you've got the mixing of the personal and the business and then entertainment expenses. Same kind of concept here because the idea would be, well, I need to mingle for my social network. It's a business related thing. That Bahama trip was a, I went to was a smoozing with the, with my clients. And so it's like, yeah, but, you know, you would think again that that really seems to kind of cross a fuzzy line between business and non-business type of stuff.