Which of the following statements about tax deductions is true?

A taxpayer is allowed a standard deduction that offsets gross income and is based on age and filing status.

A taxpayer is allowed itemized deductions, including medical expenses and charitable contributions, as long as total itemized deductions exceed the taxpayer's standard deduction.

A taxpayer is not allowed any tax deductions unless a specific tax provision provides for the deductions.

All of the above statements are true.

Which of the following expenditures is most likely to be deductible by a business?

A deduction for insurance premiums on a business' key employee, when the proceeds are excluded from taxable income.

A depreciation deduction on the purchase of business equipment calculated using the MACRS depreciation tables.

tax underpayment penalty.

All of the above are considered business deductions

Which of the following would be subject to a preferential income tax rate?

Gain on sale of shares purchased $10$ years ago.

Proceeds from the sale of merchandise inventory.

Gain on the sale of depreciated equipment when the amount of accumulated depreciation exceeds the gain.

All of the above are subject to preferential tax rates.