Answer the following statements true (T) or false (F)
1. Expenses incurred in a trade or business generally are deductions for AGI.
2. Individuals are generally allowed to deduct the greater of the standard deduction or itemized deductions.
3. Adjusted gross income (AGI) is the basis for a number of phase-outs of deductions.
4. A change to adjusted gross income cannot affect a taxpayer's itemized deductions.
1. TRUE
While exceptions apply, trade or business expenses are generally deductible for AGI, and deductions for allowable personal expenses are generally from AGI.
2. TRUE
Individuals may deduct the greater of the standard deduction or itemized deductions in arriving at taxable income.
3. TRUE
A percentage of AGI serves as a floor limiting some itemized deduction and serves as a ceiling limiting other itemized deductions and tax benefits.
4. FALSE
Many of the itemized deductions are limited by a floor or ceiling that is based on AGI.
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