Stanford owns and operates two dry cleaning businesses. He travels to Boston to

Question

Stanford owns and operates two dry cleaning businesses. He travels to Boston to discuss acquiring a restaurant. Later in the month, he travels to New York to discuss acquiring a bakery. Stanford does not acquire the restaurant but does purchase the bakery on November 1, 2017.

Stanford incurred the following expenses:

If required, round any division to two decimal places and use in subsequent computation. Round your final answer to the nearest dollar.

What is the maximum amount Stanford can deduct in 2017 for investigation expenses?

Total investigation costs related to the restaurant $43,000 Total investigation costs related to the bakery 52,300

Explanation / Answer

43000 is not deductible as he has not purchased the restaurant.

Whole of 52300 is not deductible as he has started the business.

Maximum deduction can be 5000. It is the reduced dollar for the expenses above 50000

52300-50000= 2300 deductions.

5000-2300= 2700 deductions

52300-2700= 49600 is the remaining expenses which can be amortised over 180 months till the start of starting month of business.

49600/180= 275.55 per month

Deduction for 2 months= 275.55*2= 551.11

Total deductions= 2700 + 551.11= 3251.11

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