State the differences and similarities between deductions and losses.

Question

Want to see more full solutions like this?

Answer 1

Question

Chapter 7, Problem 1DQ

To determine

State the differences and similarities between deductions and losses.

Expert Solution & Answer

Explanation of Solution

Difference:

The important difference is that most of the deductions are for the purpose of current expenditures and amortization of capital expenditures whereas the losses results from either an excess of deduction over income which refers to annual loss or an excess of basis over the amount realized on the disposition of an asset which refers to transaction loss.

Similarities:

The concept of deductions and losses refers to the amounts invested to produce income and are reductions in the taxable income under the concept of ability to pay. Further, the general approach to the deductibility of losses is similar to that of the approach towards deductions. That is, tax relief is the result of legislative grace and any deduction which is allowed must be specified in the tax law. The categorization of losses by those incurred in trade or business, personal losses is same to the approach for deduction. The limitation on any losses is similar to the limitation which is placed on deductions within each category.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Students have asked these similar questions

The December 31, 2021, balance sheet of Chen, Incorporated, showed long-term debt of $1,420,000, $144,000 in the common stock account, and $2,690,000 in the additional paid-in surplus account. The December 31, 2022, balance sheet showed long-term debt of $1,620,000, $154,000 in the common stock account and $2,990,000 in the additional paid-in surplus account. The 2022 income statement showed an interest expense of $96,000 and the company paid out $149,000 in cash dividends during 2022. The firm’s net capital spending for 2022 was $1,000,000, and the firm reduced its net working capital investment by $129,000. What was the firm's 2022 operating cash flow, or OCF?

River is a salaried exempt worker who earns $73,630 per year for a 35-hour workweek. During a biweekly pay period, River worked 105 hours. What is the gross pay?

The industrial enterprise "HUANG S.A." purchased a sorting and packaging machine from a foreign company on 1/4/2017 at a cost of €500,000. The useful life of the machine was estimated by the Management at ten (10) years, while the residual value was estimated at zero. For the transportation of the machine from abroad to the company's factory, the amount of €20,000 was paid on 15/4/2017. As the insurance coverage of the machine during transportation was the responsibility of the selling company, HUANG S.A. proceeded to insure the machine from 16/4/2017 to 15/4/2018, paying the amount of €1,200. The delivery took place on 15/4/2017. As adequate ventilation of the multifunction device is essential for its proper operation, the company fitted an air duct on the multifunction device. The cost of the air duct amounted to €2,000 and was paid on 20/4/2017. On 25/4/2017, an external electrician was paid €5,000 for the electrical connection of the device. The company also paid €5,000 to an…

Answer 2

Question

Chapter 7, Problem 1DQ

To determine

State the differences and similarities between deductions and losses.

Expert Solution & Answer

Explanation of Solution

Difference:

The important difference is that most of the deductions are for the purpose of current expenditures and amortization of capital expenditures whereas the losses results from either an excess of deduction over income which refers to annual loss or an excess of basis over the amount realized on the disposition of an asset which refers to transaction loss.

Similarities:

The concept of deductions and losses refers to the amounts invested to produce income and are reductions in the taxable income under the concept of ability to pay. Further, the general approach to the deductibility of losses is similar to that of the approach towards deductions. That is, tax relief is the result of legislative grace and any deduction which is allowed must be specified in the tax law. The categorization of losses by those incurred in trade or business, personal losses is same to the approach for deduction. The limitation on any losses is similar to the limitation which is placed on deductions within each category.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 3

Question

Chapter 7, Problem 1DQ

To determine

State the differences and similarities between deductions and losses.

Expert Solution & Answer

Explanation of Solution

Difference:

The important difference is that most of the deductions are for the purpose of current expenditures and amortization of capital expenditures whereas the losses results from either an excess of deduction over income which refers to annual loss or an excess of basis over the amount realized on the disposition of an asset which refers to transaction loss.

Similarities:

The concept of deductions and losses refers to the amounts invested to produce income and are reductions in the taxable income under the concept of ability to pay. Further, the general approach to the deductibility of losses is similar to that of the approach towards deductions. That is, tax relief is the result of legislative grace and any deduction which is allowed must be specified in the tax law. The categorization of losses by those incurred in trade or business, personal losses is same to the approach for deduction. The limitation on any losses is similar to the limitation which is placed on deductions within each category.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter 7, Problem 1DQ

To determine

State the differences and similarities between deductions and losses.

Expert Solution & Answer

Explanation of Solution

Difference:

The important difference is that most of the deductions are for the purpose of current expenditures and amortization of capital expenditures whereas the losses results from either an excess of deduction over income which refers to annual loss or an excess of basis over the amount realized on the disposition of an asset which refers to transaction loss.

Similarities:

The concept of deductions and losses refers to the amounts invested to produce income and are reductions in the taxable income under the concept of ability to pay. Further, the general approach to the deductibility of losses is similar to that of the approach towards deductions. That is, tax relief is the result of legislative grace and any deduction which is allowed must be specified in the tax law. The categorization of losses by those incurred in trade or business, personal losses is same to the approach for deduction. The limitation on any losses is similar to the limitation which is placed on deductions within each category.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 7, Problem 1DQ

To determine

State the differences and similarities between deductions and losses.

Expert Solution & Answer

Explanation of Solution

Difference:

The important difference is that most of the deductions are for the purpose of current expenditures and amortization of capital expenditures whereas the losses results from either an excess of deduction over income which refers to annual loss or an excess of basis over the amount realized on the disposition of an asset which refers to transaction loss.

Similarities:

The concept of deductions and losses refers to the amounts invested to produce income and are reductions in the taxable income under the concept of ability to pay. Further, the general approach to the deductibility of losses is similar to that of the approach towards deductions. That is, tax relief is the result of legislative grace and any deduction which is allowed must be specified in the tax law. The categorization of losses by those incurred in trade or business, personal losses is same to the approach for deduction. The limitation on any losses is similar to the limitation which is placed on deductions within each category.

Answer 6

Chapter 7, Problem 1DQ

To determine

State the differences and similarities between deductions and losses.

Expert Solution & Answer

Explanation of Solution

Difference:

The important difference is that most of the deductions are for the purpose of current expenditures and amortization of capital expenditures whereas the losses results from either an excess of deduction over income which refers to annual loss or an excess of basis over the amount realized on the disposition of an asset which refers to transaction loss.

Similarities:

The concept of deductions and losses refers to the amounts invested to produce income and are reductions in the taxable income under the concept of ability to pay. Further, the general approach to the deductibility of losses is similar to that of the approach towards deductions. That is, tax relief is the result of legislative grace and any deduction which is allowed must be specified in the tax law. The categorization of losses by those incurred in trade or business, personal losses is same to the approach for deduction. The limitation on any losses is similar to the limitation which is placed on deductions within each category.

Answer 7

Chapter 7, Problem 1DQ

To determine

State the differences and similarities between deductions and losses.

Answer 8

Expert Solution & Answer

Explanation of Solution

Difference:

The important difference is that most of the deductions are for the purpose of current expenditures and amortization of capital expenditures whereas the losses results from either an excess of deduction over income which refers to annual loss or an excess of basis over the amount realized on the disposition of an asset which refers to transaction loss.

Similarities:

The concept of deductions and losses refers to the amounts invested to produce income and are reductions in the taxable income under the concept of ability to pay. Further, the general approach to the deductibility of losses is similar to that of the approach towards deductions. That is, tax relief is the result of legislative grace and any deduction which is allowed must be specified in the tax law. The categorization of losses by those incurred in trade or business, personal losses is same to the approach for deduction. The limitation on any losses is similar to the limitation which is placed on deductions within each category.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Ch. 7 - Prob. 1DQ Ch. 7 - What is the purpose of the passive loss rules?Ch. 7 - Prob. 11DQ Ch. 7 - Prob. 15DQ Ch. 7 - Carlos opens a dry cleaning store during the year....Ch. 7 - The Goodson Company is a chain of retail...

State the differences and similarities between deductions and losses.

Videos

State the differences and similarities between deductions and losses.

Explanation of Solution

Want to see more full solutions like this?

Chapter 7 Solutions