The Crucial Reason for Determining Whether an Item Is Deductible

question 2

Multiple Choice

The crucial reason for determining whether an item is deductible as an expense under § 162 or under § 212 is that

• A)Production-of-income expenses are not deductible.
• B)§ 162 business expenses usually are deductions for A.G.I., while § 212 production-of-income expenses usually are miscellaneous itemized deductions.
• C)§ 162 business expenses are deductions from A.G.I., while § 212 production-of-income expenses are deductions for A.G.I.
• D)It resolves certain ownership questions.

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Definitions:

Day-to-Day Operations

The regular, routine activities necessary for an organization or business to function effectively on a daily basis.

Corporation

A legal entity created under state law, recognized as separate from its owners, with its own rights, privileges, and liabilities.

Alien Corporation

A corporation formed in another country but doing business in the United States.

Domestic Corporation

In a given state, a corporation that is organized under the law of that state.