Final answer:
There are three exceptions to the general disallowance of lobbying expenses: lobbying for local legislation, lobbying directly related to one's own business, and participation in the regulatory rulemaking process.
Step-by-step explanation:
Lobbying expenses typically are not deductible due to rules intended to limit the influence of special interests on legislation. However, there are exceptions to the general disallowance of lobbying expenses. First, lobbying expenses are permitted for local legislation, such as efforts to influence the legislation of any local council or similar governing body. Second, taxpayers may deduct lobbying expenses that are in connection with appearances before, or communications with, any legislative body about proposed legislation which might affect the taxpayer's own business. Third, a deduction is also allowed for any amounts paid in connection with participation in any submission to a regulatory body during the rulemaking process.