Deduction concepts include which of the following?
I.Capital Recovery Concept.
II.Legislative Grace Concept.
III.Business Purpose Concept.
IV.Ability to Pay Concept.

A)Only statement I is correct.
B)Only statement II is correct.
C)Statements I and II are correct.
D)Statements I, II, and III are correct.
E)Statements I, II, III, and IV are correct.

Question

Deduction concepts include which of the following?
I.Capital Recovery Concept.
II.Legislative Grace Concept.
III.Business Purpose Concept.
IV.Ability to Pay Concept.
​
A)Only statement I is correct.
B)Only statement II is correct.
C)Statements I and II are correct.
D)Statements I, II, and III are correct.
E)Statements I, II, III, and IV are correct.

Quizplus · Accepted Answer

All four concepts are part of the deduction concepts in tax law. 
I. Capital Recovery Concept allows taxpayers to recover the cost of their capital investment through depreciation and amortization deductions. 
II. Legislative Grace Concept implies that taxpayers are entitled to deductions only if they are explicitly authorized by the tax code or regulations. 
III. Business Purpose Concept requires that the expenses deducted by taxpayers must be related to their trade or business. 
IV. Ability to Pay Concept implies that taxpayers should be taxed according to their ability to pay, which means that those who earn more should pay more taxes.

Deduction Concepts Include Which of the Following