Principles Of Taxation Flashcards
1
Q
What general principle of income taxation applies to deductible expenses?
A
The IRS generally only allows expenses to be deducted if the expenses funds something that has the potential to generate taxable income.
This why the HSA is so unusual.
It is also why Section 419 plans, with allowed for income tax deduction for purchasing cash value life insurance which then paid out money tax free through loans and the death benefit.
