An expenditure that may legally be used to reduce an individual's income-tax liability. Potential deductions include charitable contributions, mortgage interest expense, state and local income taxes, and property taxes. Also called itemized deduction, tax deduction, tax shield. See also charitable contribution deduction, standard deduction.
expense that is subtracted from taxable income in order to reduce the amount of
income tax that has to be paid. Charitable donations and business expenses,
such as entertainment expenses and office supplies, are examples of items that
can be deducted.
An expenditure that may legally be used to reduce an individual's income-tax liability. Potential deductions of particular interest to investors are expenditures for subscriptions to financial publications, a lock box for storing securities, and computer software for investment-related activities. These deductions, combined with employee business expenses and miscellaneous deductions, may be subtracted from a person's taxable income only to the extent their total exceeds 2% of that person's adjusted gross income. Interest paid on loans used to finance investments is deductible only against investment income. Also called itemized deduction, tax deduction. See also charitable contribution deduction.
The process of reasoning from the general to the specific, in which a conclusion follows necessarily from the premises.
A conclusion reached by this process.
Usage The logical processes known as deduction and induction work in opposite ways. In deduction general principles are applied to specific instances. Thus, using a mathematical formula to figure the volume of air that can be contained in a gymnasium is applying deduction. Similarly, applying a law of physics to predict the outcome of an experiment is reasoning by deduction. By contrast, induction makes generalizations based on a number of specific instances. The observation of hundreds of examples in which a certain chemical kills plants might prompt the inductive conclusion that the chemical is toxic to all plants. Inductive generalizations are often revised as more examples are studied and more facts are known. If certain plants that have not been tested turn out to be unaffected by the chemical, the conclusion about the chemical's toxicity must be revised or restricted. In this way, an inductive generalization is much like a hypothesis.