Final answer:
Sue Swank may not deduct the $1,000 in lobbying expenses to influence local legislation, as typically lobbying costs to influence legislation are not deductible business expenses.
Step-by-step explanation:
The student's question revolves around whether Sue Swank, who owns a local accounting firm in New Orleans, Louisiana, can deduct lobbying expenses incurred due to local legislation. In reality, according to the U.S. tax code, generally, lobbying expenses intended to influence legislation are not deductible as business expenses. Therefore, even though the proposed legislation to increase the hotel room tax is a local issue, Swank would not be allowed to deduct the $1,000 lobbying expenses on her business tax return.
Considering the additional reference information provided, we can see a scenario where business owners consider the impact of a tax on their business. Here, two factory owners could theoretically be willing to lobby against the tax to a large extent, although in practice, the amount spent might be less due to uncertain outcomes. Likewise, townspeople might theoretically spend a significant sum to ensure the passage of a tax that benefits them, but again, the actual amount spent might be reduced due to the uncertain nature of lobbying success.