The taxpayer incorrectly took a $5,000 deduction (e.g., incorrectly calculated depreciation) in 2012 and as a result his taxable income was reduced by $5,000. The taxpayer discovered his error in 2013. The taxpayer must add $5,000 to his 2013 gross income in accordance with the tax benefit rule to correct for the 2012 error.

Question

Quizplus · Accepted Answer

The tax benefit rule does not require the taxpayer to add the $5,000 to his 2013 gross income. Instead, the taxpayer should amend the 2012 tax return to correct the error.

The Taxpayer Incorrectly Took a $5,000 Deduction (E