Tax Benefit Rule Doctrine Explained With Exam | CPA exam Regulation. INcome Tax Course. Schedule A

In this video, I explain the tax benefit rule doctrine. Under the tax benefit rule: taxpayers include in gross income refunds they receive that gave rise to a deduction in previous tax years; and. taxpayers do not include these amounts in gross income to the extent they did not reduce income tax in the year of the deduction

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A rule that provides that the amount of an expense recovered must be included in income in the year of the recovery to the extent the original expense resulted in a tax benefit. The most common example is a state income tax refund of tax deducted in the prior year.