Question

Which of the following tax law rules create incentives for tax planning?

a. The Federal income tax itself is deductible in determining taxable income.
b. Reducing the amount of income taxes that are paid decreases a taxpayer's allowable deductions.
c. The Federal income tax itself is not allowed as a deduction in determining taxable income.
d. None of the above.

Answer 1

The correct answer is d. None of the tax law rules listed create incentives for tax planning.

Step-by-step explanation:

The correct answer is d. None of the above. None of the tax law rules listed create incentives for tax planning. Let's go through each option to understand why:

• a. The Federal income tax itself is deductible in determining taxable income: This statement is false. The Federal income tax is not deductible in determining taxable income.
• b. Reducing the amount of income taxes that are paid decreases a taxpayer's allowable deductions: This statement is also false. Reducing the amount of income taxes paid does not decrease a taxpayer's allowable deductions. Deductions are determined by specific tax laws and regulations, not the amount of taxes paid.
• c. The Federal income tax itself is not allowed as a deduction in determining taxable income: This statement is true. The Federal income tax is not allowed as a deduction in determining taxable income.

Therefore, the correct answer is d. None of the above.