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 2019, 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: a.Expense $9,000 for 2019 and capitalize $14,000. b.Expense $23,000 for 2019. c.Capitalize $23,000. d.Capitalize $14,000 and not deduct $9,000. e.None of these choices are correct.

Answer 1

b.Expense $23,000 for 2019.

Step-by-step explanation:

The computation is shown below:

= Spend in the investigation for the TV rental stores in South Carolina + Spend in the investigation for the TV rental stores in Georgia

= $14,000 + $9,000

= $23,000

Hence, the amount of expense $23.000 would be considered

Therefore the option b is correct