Which of the following is not a "trade or business" expense?
A. Mortgage interest on a warehouse
b. Mortgage interest on a personal residence
c. Cost of goods sold
is it B
yes
Yes, you are correct. Mortgage interest on a personal residence (option B) is not considered a "trade or business" expense.
To arrive at this answer, you can refer to IRS guidelines for determining "trade or business" expenses.
In general, for an expense to be considered a "trade or business" expense, it should be ordinary and necessary for carrying on a trade or business. This means that the expense must be common and accepted in the industry, as well as helpful and appropriate for the business's operation.
In this case, options A and C can potentially be "trade or business" expenses. Option A, mortgage interest on a warehouse, can be a deductible expense if it is used for business purposes. Option C, the cost of goods sold, is an essential expense directly related to the production or purchase of the goods being sold.
However, option B, mortgage interest on a personal residence, does not relate to carrying on a trade or business. It is a personal expense related to the ownership of a personal residence and is therefore not considered a "trade or business" expense.