Question

Compare and contrast the different deductions and exclusions from income between individuals and corporations. Describe at least two (2) tax benefits that are available to corporations that are not available to individuals. Discuss the reasons why these differences exist. Please answer the questions clearly.

Answer 1

• Deductions and exclusions both are nearly same terms for individuals and corporations.
• The expenses incurred for the business will be allowed as deductions from gross total income.
• A deduction is reduce the amount of payables, to increase the gross total income.
• exclusion is a situation that causes a tax payer to not need to pay tax on income.
• Both individuals and corporations apply tax rates to taxable incometo determine tax liability reduce such liability by credits.

?Difference :

• individuals have different diductions from adjusted gross income , but when its come to corporate they do not show any difference from deductions types and not to adjusted gross income.
• Unlike individuals corporations do not have any personal deductions.

?Tax benifits that are available to corporation wcs that are not available to individuals :

• in the case of political contributions made by the corporate they have a deduction, but in the case of individuals it will not be apply.
• In any loss incurred by the corporations the amount will fully deducted, but for individuals they need to prove that they had a profit motive in order to allow such losses as deduction.
• The reserve in the corporation is kept for further expantion of business is deductable for corporations, but in case of individuals there is no benifit to them.