Which of the Following Statements Regarding Deductions for Real Property

question 6

Multiple Choice

Which of the following statements regarding deductions for real property taxes is incorrect?

• A) A taxpayer is allowed to immediately deduct property taxes as the taxpayer makes monthly mortgage payments to an escrow account held by her mortgage company.
• B) Taxpayers are not allowed to deduct payments made for setting up water and sewer services.
• C) An individual deducts real property taxes on her principal residence as a from AGI deduction.
• D) Taxpayers are not allowed to deduct payments made for repairs to neighborhood sidewalks.

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Definitions:

Additional Income

Extra earnings obtained beyond the regular sources of income or revenue.

Proportional Tax

A tax whose burden is the same proportion of income for all households.

Regressive Tax

A tax whose burden, expressed as a percentage of income, falls as income increases.

Proportional Tax

A tax system where the rate remains constant regardless of the amount on which the tax is imposed.