I am trying to prove to myself that incurring expenses just for the purpose of writing them off never saves money. It is always better to not incur the expense at all if you can avoid it. This is my calculation. IS it correct?
I: income E: expense r: tax rate
So, to actually 'save' money by incurring an expense and then writing it off:
E + (I - E)r <= Ir // left hand side represents total expense + tax, right hand side represents tax without any expenses(write off) E + Ir - Er < = Ir E < = Er 1 <= r
But 0 < r < 1, hence disproved.