Well, you're in luck! The IRS has prepared a 56-page document on just this topic [1]. The summary on page 3 is: > To be deductible, a business expense must be

Well, you're in luck! The IRS has prepared a 56-page document on just this topic [1]. The summary on page 3 is: > To be deductible, a business expense must be both ordinary and necessary. An ordinary expense is one that is common and accepted in your trade or business. A necessary expense is one that is helpful and appropriate for your trade or business. An expense does not have to be indispensable to be considered necessary. Your particular example with free or below-market rent would almost certainly be considered tax evasion -- in fact, I believe this is one of the things that Allen Weisselberg is charged with [2]. [1] https://www.irs.gov/pub/irs-pdf/p535.pdf https://www.irs.gov/pub/irs-pdf/p535.pdf [2] https://www.bloomberg.com/news/articles/2020-11-02/trump-perks-for-weisselbergs-included-free-rent-tax-preparer https://www.bloomberg.com/news/articles/2020-11-02/trump-per...