Are Your Business-Related Expenses Tax-Deductible? Not Always

Earlier this month, Elon Musk announced he would terminate his agreement with Twitter. As a result, Musk could be on the hook for a $1 billion termination fee—some are calling it a breakup fee—as well as additional costs.

Predictably, opinions about the breakup—and the fee—started flying on social media shortly after the announcement. Among other things, some dismissed the enormous fee as the cost of doing business, shrugging it off as tax-deductible.

From single-member limited liability companies to multinational enterprises, taxpayers often believe that the act of paying a business-related expense makes it deductible for federal income tax ...