Question

Iris, a calendar year cash basis taxpayer, owns and operates several TV rental outlets in Florida, and wants to expand to other states. During 2018, she spends $14,000 to investigate TV rental stores in South Carolina and $9,000 to investigate TV rental stores in Georgia. She acquires the South Carolina operations, but not the outlets in Georgia. As to these expenses, Iris should: Group of answer choices Expense $9,000 for 2018 and capitalize $14,000. Capitalize $23,000. Capitalize $14,000 and not deduct $9,000. None of the above. Expense $23,000 for 2018.

Answer 1

e. Expense $23,000 for 2018.

Step-by-step explanation:

In this given case, Iris owns and operate TV rentals outlets, the investigation expenses which are deductible for 2018 are:

= $14,000 + $9,000

= $23,000

$23,000 should be charged off as expense for 2018.