Ordinary and Necessary Expense Law and Legal Definition

Ordinary and necessary expense refers to an expense that is normal or usual. It is also appropriate for the operation of a particular trade or business. Generally, ordinary and necessary expense is paid or incurred during the taxable year. Hence, it is tax-deductible. Ordinary and necessary expense are also known as ordinary and necessary business expense.[ Klinger v. Adams County Sch. Dist. No. 50, 130 P.3d 1027 (Colo. 2006)]