The taxpayer incorrectly took a $5,000 deduction (e.g. ,incorrectly calculated depreciation)in 2010 and as a result his taxable income was reduced by $5,000.The taxpayer discovered his error in 2011.The taxpayer can add $5,000 to his 2011 gross income in accordance with the tax benefit rule to correct for the 2010 error.

Question

Quizplus · Accepted Answer

The tax benefit rule does not apply to correct errors from prior years. Instead, the taxpayer should amend the 2010 tax return to correct the error.

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