Which type of expenditures are generally deductible under IRS Code 174?

Research and experimental expenditures are generally deductible under IRS Code 174. This section of the tax code specifically addresses expenses related to research and development activities that are aimed at developing or improving products, processes, or techniques.

The rationale behind the deductibility of these expenditures is to encourage innovation and technological advancement within the economy. By allowing businesses to write off these costs, the IRS seeks to foster an environment conducive to research and development, thus promoting long-term growth and competitiveness.

In contrast, personal expenses are typically not deductible because they do not relate to the income-producing activities of a business or an individual's job. Capital improvements, which involve a significant enhancement of property or an increase in its value, often have to be capitalized rather than deducted in the year they are incurred. Real estate commissions, being tied to the sale of property rather than the operational activities of a business, also do not fall under the deductible research and experimental expenditures defined by IRS Code 174.