Question

multiple select question
select all that apply
which of the following choices describe tax deductions?
□ tax deductions, like income, follow the all - inclusive concept.
□ tax deductions reduce an individual’s tax liability dollar for dollar.
□ taxpayers are not allowed to deduct anything unless a specific tax provision allows them to do so.
□ tax deductions are a matter of legislative grace.

Explanation:

• Tax deductions do not follow the all-inclusive concept (this applies to income, not deductions).
• Tax deductions reduce taxable income, not tax liability dollar-for-dollar (tax credits do this).
• Tax deductions are only permitted when specific tax rules allow, so taxpayers cannot deduct items without legislative approval.
• Tax deductions are granted by legislative action, making them a matter of legislative grace.

Answer:

☑ Taxpayers are NOT allowed to deduct anything unless a specific tax provision allows them to do so.
☑ Tax deductions are a matter of legislative grace.