Expenses incurred in the production of income, such as legal fees and safe deposit box rentals, may be deducted even though the income produced is wholly tax-exempt (i.e., municipal bond interest income).

Question

Quizplus · Accepted Answer

Expenses incurred to produce tax-exempt income, such as interest on municipal bonds, are not deductible for federal income tax purposes.

Expenses Incurred in the Production of Income, Such as Legal