Discussion:Avoiding Economic Reality inquiry - remove deductions

I believe that if the omission of a deduction is done to frustrate effective tax administration, then the answer is no.

"At the hearing of this appeal, counsel for the taxpayer laid stress upon the language of the statute providing that the deduction shall be allowed. He insisted that allowance indicated an option to the taxpayer to take the deduction or not as he saw fit. Of course a taxpayer may neglect or refuse to make a correct computation of income in a given year and pay a greater tax than he owes — and nobody will force the excess tax back upon him. * * * We do not think the word allow intended any option. As used, it merely means consider or subtract. * * * Instead of saying “the following amounts shall be subtracted,” Congress said “there shall be allowed as deductions,” meaning the same thing. * * * To hold that the use of the word allow and its derivatives indicated an option in the taxpayer to claim his deduction, or to treat the fact entitling him thereto as if it had not occurred and to make future returns on the basis of its nonoccurrence, would lead to many absurdities.* * * If a taxpayer owned a plot of land with two buildings on it, which he bought as a unit, and one of the buildings was destroyed by fire in 1916, but he claimed no deduction for the loss in his 1916 return, should he be permitted on selling the property in 1920 to compute his income without reference to the 1916 loss, thus in effect transferring his loss from a year of low tax rates to one of high rates? * * * The only alternatives to such a ruling would be (1) to put every taxpayer in a position to postpone final determination of his taxes until just before the expiration of the statute of limitations and then to throw his deductions into the year in which they would benefit him the most, or else, and we think this the correct rule, (2) to hold strictly that deductions must all be taken in the year in which their allowance is provided for by statute, and that failure to take them does not preclude the Commissioner, in computing taxes for subsequent years, from determining the taxes for those years upon the facts applicable thereto." [emphasis in original]

"In the case of an individual who does not elect to itemize his deductions for the taxable year, for purposes of this subtitle, the term “taxable income” means adjusted gross income, minus— (1) the standard deduction, and (2) the deduction for personal exemptions provided in section 151."

I agree that the easy way out of this is to not elect to itemize. However, if you elect to itemize then can you pick and choose which to report. Such as show state income tax and mortgage interest, but not show medical expenses or miscellaneous deductions subject to 2%.