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Deductions Allowed Under I.R.C. (( 161-166 and 212-219)

Deductions Allowed Under I.R.C. (( 161-166 and 212-219

Section 161 of the Internal Revenue Code ("I.R.C." or "the Code") allows for the deduction of certain expenses when computing taxable income under section 63. The Code defines taxable income as "gross income minus the deductions allowed by this chapter" (I.R.C. ( 63). Generally, sections 161-166 itemize deductions for individual and corporate taxpayers. Also generally, sections 212-219 itemize additional deductions for individual taxpayers involved in activities that constitute the production of income rather than being a trade or business. Thus, sections 212-219 complement the deductions for individual taxpayers allowed under sections 161-166.

The Editorial Summary preceding the deductions allowable under section 161-166 states that the section is not intended to provide "all-inclusive justification for deducting the expenses of a trade or business" (I.R.C., p. 144). Rather, the sections provide the general authority and particular types of expenses that are deductible in accordance with the provisions contained in other code sections (I.R.C., p. 144). All deductions are statutory in nature, meaning that unless a particular item of expense is authorized it cannot be deducted from income.

Section 162(a) of the Code allows a deduction from gross income for all the ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business. This includes a reasonable allowance for salaries or other compensation for taxpayers and their employees (( 162(a)(1)), traveling expenses, including reasonable amounts expended for meals and lodging, while in the pursuit of business if such travel does not exceed 1 year (( 162(a)(2)), and rent or other payments for business property to which the taxpayer does not have title (( 162(a)(3)). State legislators, as individual taxpayers who live more than 50 miles from the capitol building of thei...

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Deductions Allowed Under I.R.C. (( 161-166 and 212-219). (1969, December 31). In LotsofEssays.com. Retrieved 01:06, March 26, 2019, from https://www.lotsofessays.com/viewpaper/1682413.html