Which of the following amounts is NOT deducted in converting Net Income for Tax
ID: 2408158 • Letter: W
Question
Which of the following amounts is NOT deducted in converting Net Income for Tax Purposes to Taxable Income?
Losses of other years.
The lifetime capital gains deduction.
An amount related to the exercise or sale of stock options.
The excess of allowable capital losses over taxable capital gains for the current year.
A.Losses of other years.
B.The lifetime capital gains deduction.
C.An amount related to the exercise or sale of stock options.
D.The excess of allowable capital losses over taxable capital gains for the current year.
Explanation / Answer
Correct answer is A. Losses of Other years.
The gains and incomes not allowable for tax purpose are deducted from net income for tax purposes while the losses and expenses not allowable for tax purposes are added to net income for tax purposes. Life time capital gains deduction and amount related to exercise or sale of stock options are inflow of cash hence, it is deducted.
Excess of allowable capital losses over taxable income is also not dedcuted or added because it is aloowable.
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