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.
It is important to separate business expenses from the following expenses:
The expenses used to figure the cost of goods sold
If you have an expense that is partly for business and partly personal, separate the personal part from the business part.
If you are self-employed, you can also deduct the business part of interest on your car loan, state and local personal property tax on the car, parking fees, and tolls, whether or not you claim the standard mileage rate. You can use the non business part of the personal property tax to determine your deduction for taxes on Schedule A (Form 1040) if you itemize your deductions.
For more information, see Pub. 535