Discuss the given statement.
Explanation of Solution
Classification of deductible expenses: Deductible expenses are classified as deductions for adjusted gross income (AGI) or deductions from adjusted gross income. Deductions for AGI are claimed if the taxpayer itemizes or not. Deductions from AGI effect in a tax benefit simply if, jointly filed a tax return, exceeds the standard deduction of the taxpayer. Whether, the itemized deductions are fewer than the standard deduction, and then there is no tax benefit.
Even though the Code gives all-inclusive definition of income, deductions should be particularly provided for in the Code in order to be allowable.
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- Individual Income TaxesAccountingISBN:9780357109731Author:HoffmanPublisher:CENGAGE LEARNING - CONSIGNMENT