Which of the following statements regarding exclusions and/or deferrals is false?
A) Exclusions are favorable because taxpayers never pay tax on income that is excluded.
B) Interest income from municipal bonds is excluded from gross income.
C) Deferrals are income items taxpayers realize in one year but include in gross income in a subsequent year.
D) An income item need not be realized in order to qualify as an exclusion item.An exclusion is realized income that is permanently excluded from taxation.If the income is not realized,it would not be included in gross income to begin with so it need not be excluded from income.
Correct Answer:
Verified
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