The Deemed Paid Adjustment Compels a Taxpayer to Claim as a Credit

question 197

Essay

The deemed paid adjustment compels a taxpayer to claim as a credit for a past gift the tax that would have been paid under current rates rather than the tax that was actually paid.
a.What is the justification for this rule?
b.Does the application of the rule always operate in favor of a taxpayer?

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Definitions:

Marginal Cost

The extra expense resulting from the manufacture of an additional unit of a product or service.

Competitive Price-Taker

A market participant who cannot influence the price on the market but instead must accept the prevailing market price.

Marginal Revenue

The additional income earned from selling one more unit of a good or service.

Competitive Price-Taker

A market participant who accepts the prevailing market prices as given because they have no power to influence those prices due to intense competition.