IRS 280E

IRS Code 280E is a tax regulation that prohibits businesses involved in illegal activities, like selling controlled substances, from deducting ordinary business expenses on their taxes. This means that if a company sells illegal drugs, it can't subtract expenses such as rent, salaries, or supplies when calculating taxable income. As a result, these businesses face higher tax burdens compared to legal businesses, which can deduct their costs. Essentially, 280E significantly limits the allowable deductions for certain industries, increasing their taxable income and tax liability.