Question

Which of the following is not true of the tax deductibility of medical expense coverage for sole proprietors and partners?

A) The cost of coverage is tax-deductible for the individual
B) The deduction is limited to the net earnings of the business
C) The deduction is limited to 50% of the medical expenses
D) The deduction is taken on the individual's personal income tax return

Answer 1

The incorrect statement about tax deductibility for medical expense coverage for sole proprietors and partners is that the deduction is limited to 50% of the expenses; the correct limit is 100% of the premium costs.

Step-by-step explanation:

The statement which is not true about the tax deductibility of medical expense coverage for sole proprietors and partners is C) The deduction is limited to 50% of the medical expenses. In fact, sole proprietors and partners who pay for their own health insurance can deduct 100% of their premium costs as a personal income tax deduction. This deduction is taken on the individual's personal income tax return, and it is only available if the business is showing a profit because it cannot exceed the net earnings of the business.