In the case of an individual, there shall be allowed as a deduction all the ordinary and necessary expenses paid or incurred during the taxable year—
(1) for the production or collection of income;
(2) for the management, conservation, or maintenance of property held for the production of income; or
(3) in connection with the determination, collection, or refund of any tax.
And that conclusion is from this comment in the RR.The deduction is allowable in the year that the single-sum repayment is paid by the taxpayer, but only if the taxpayer itemizes his deductions. A deduction under § 165(a) for an individual with losses that are incurred in a trade or business is considered a miscellaneous itemized deduction and, thus, is subject to the 2-percent floor established under § 67(a) for miscellaneous itemized deductions.
A deduction under § 165(a) for an individual with losses that are incurred in a trade or business is considered a miscellaneous itemized deduction and, thus, is subject to the 2-percent floor established under § 67(a) for miscellaneous itemized deductions.
The amount of the section 212 itemized deduction otherewise allowable for legal fees must be decreased to the extent that those fees are allocable to the portion of social security disability benefits not included in the taxpayer's gross income.
(d) Itemized deductions
For purposes of this subtitle, the term “itemized deductions” means the deductions allowable under this chapter other than—
(1) the deductions allowable in arriving at adjusted gross income, and
(2) any deduction referred to in any paragraph of subsection (b).
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