Question: May a person deduct business expenses before giving maaser k’safim? May he offset profits with losses from a different transaction?
Short Answer: Most Acharonim allow business expense deductions before giving maaser k’safim. Many Acharonim also allow offsetting profits with losses so long as the transactions occurred in the same maaser year or before maaser was calculated.
I. The Comparison to Produce
The Pischei T’shuvah (Yoreh Dei’ah 249:1) cites the opinion of the Chavos Yair (224), that a person may deduct business expenses before giving maaser k’safim from the profits. The Chavos Yair reasons that a person “partners” with Hashem in doing business, and thus all business expenses are deducted before each “partner” receives his respective profits. [But see Nish’al David (23) who doubts this “partnership” analogy.]
The Pischei T’shuvah, however, also cites the Sh’eilas Ya’avetz (6) who queries whether business expenses are deductible, especially in light of the fact that the source of maaser k’safim is from maaser of produce where nothing is deducted. The Pischei T’shuvah understands that the Sh’eilas Ya’avetz ultimately holds that business expenses are not deductible. [But see sefer Y’shuos Daniel (144:11:71) and P’sakim U’T’shuvos (149:27:249) who understand the opinion of the Sh’eilas Ya’avetz differently – that he ultimately agrees that business expenses can be deducted by maaser k’safim.]
Indeed, the Haflaah (K’subos 50a) likewise assumes that business expenses are not deductible by maaser k’safim.
II. Practical Halachah
Most poskim, including the Aruch HaShulchan (Yoreh Dei’ah 249:7) and the Tz’dakah U’Mishpat (5:8), allow business expenses to be deducted from maaser k’safim. These expenses include, but are not limited to, necessary business meals, business clothing, storage for merchandise, insurance on merchandise, and childcare expenses. See Tz’dakah U’Mishpat.
Notably, the Minchas Yitzchak (5:34) allows a person to deduct the full cost of expensive business purchases, such as a Lexus, where these expenses are necessary to appear successful, which will benefit the business. The T’shuvos V’Hanhagos (1:560:10) appears to disagree and would only allow the deduction of a standard-priced car.
There is also a discussion whether certain taxes are deductible. While Rav Moshe Feinstein zt”l (Yoreh Dei’ah 1:143) allows a person to deduct all business taxes from maaser k’safim, the Minchas Yitzchak (ibid) disagrees and rules that ideally all taxes are not deductible. [See Rav Ari Marburger, Practical Guide to Giving Charity, who understands Rav Moshe Feinstein as allowing deductions for all employee taxes, sales tax, real estate tax for the business, and any corporate income tax.]
III. Offsetting Losses Against Gains
A person suffers a $1,000 loss on one transaction, but gains $5,000 on a second transaction. Must he take off maaser k’safim from the $5,000 gain or can he offset the gain by the $1,000 loss and only take off maaser k’safim from the remaining $4,000?
The Sh’vus Yaakov (2:86) rules that a person can only offset losses against gains when they occur in the same transaction. However, when the losses come from “makom acher” – “another place” – then they do not offset the gains. This is a tremendous stringency.
However, many argue, including the Chavos Yair (ibid) and Sh’eilas Ya’avetz, and hold that any business loss can offset any business gain. Indeed, the Sheivet HaLevi (5:133) cites the Noda BiYehudah (brought in the Pischei T’shuvah ibid) who agrees and allows any business loss to offset any business gain, so long as they occur in the same maaser year. Rav Moshe Feinstein (Igros Moshe ibid) agrees, as well.
Importantly, the sefer Tz’dakah U’Mishpat (5:9:38) cites various Acharonim who understand the cutoff date for this offset differently. In other words, these Acharonim hold that this offset can be performed so long as you have not made a maaser calculation.
Next Week’s Topic: May one use maaser k’safim funds for kimcha d’Pischa, the special charity given before Pesach?