1) Explain the distinction between a deduction and a credit.
2) What is the normal due date for the tax return of calendar-year taxpayers? What happens to the due date if it falls on a Saturday, Sunday, or holiday?
3) Is there any tax advantage for an individual who held an appreciated capital asset for eleven months to delay the sale of the asset? Explain.© BrainMass Inc. brainmass.com October 2, 2020, 3:36 am ad1c9bdddf
1) A tax deduction reduces a taxpayer's total tax liability. Examples of common deductions include medical expenses, work expenses, mileage expenses, charity contributions, real estate taxes, and mortgage interest paid. A credit is refundable, meaning it decreases your total tax owed on the federal tax return dollar for dollar. If you owe $1,000 after deductions are taken and you receive an earned income tax credit worth $2,000, you will receive a $1,000 refund (2,000 minus the $1,000 you owe). Deductions don't ...
This solution discusses several tax accounting concepts. The distinction between a deduction and a credit are given. I also discuss the normal due date for tax returns when the taxpayer is a calendar year taxpayer, and what happens to taxpayers if the due date falls on a day other than the last day of the filing season. In addition, I also discuss any tax advantages that result from an individual who holds an appreciated capital asset for eleven months to delay the sale of an asset.