Intuit Academy Tax Practice Exam 2026 – All-in-One Guide for Exam Mastery!

The correct choice highlights that capital losses, business losses, and certain casualty losses can be deducted on a tax return, reflecting the multitude of tax deductions available to taxpayers.

Capital losses occur when assets such as stocks are sold for less than their purchase price. These losses can offset capital gains, and if the losses exceed the gains, taxpayers can deduct a certain amount against other income, such as wages or salaries, which is beneficial for tax planning.

Business losses arise when the expenses of running a business exceed its income. These losses can typically be deducted from other income on an individual's tax return, providing relief to those who invest in operating businesses that may not perform well financially in a given year.

Certain casualty losses refer to losses from unforeseen events, such as natural disasters or accidents, that damage property. Taxpayers may claim these losses on their returns when they meet specific IRS requirements, such as determining the amount of loss and the event's severity.

Together, these deductions aim to provide a more equitable tax burden by allowing taxpayers to offset their income with legitimate losses incurred during the tax year, thereby reducing their overall taxable income.