Kimiya ITO

This paper examines the scope of "necessary expenses" for sole proprietors under Japanese income tax system, focusing particularly on home office expenses and vehicle costs. As digitalization lowers barriers to starting businesses, the author warns that excessive reliance on vague "social norms" for tax deductions leads to tax gaps and administrative burdens. By examining Japanese law and case precedents, and analyzing and categorizing provisions in U.S. tax law, the author proposes a shift toward more objective standards appropriate for the modern society.