The Brock\'s business. Westchester Wood has the following expenses: 1. Assume We

Question

The Brock's business. Westchester Wood has the following expenses:

1. Assume Westchester Wood is a HOBBY
a. identify ) that are allowed and to what extent and
b. identify which expenditures are Tier 1, Tier 2, or Tier 3 expenditures

11. Utilities $6,000
12. Insurance $3,500
13. Laabor (to stain/paint furniture) $9800
14. Property Taxes $5,000
15. Delivery truk(used truck) $9500
16. bank fees $2,000
17. telephone $2500
18. computer $1300
19. meals and entertainment $1800
20. Accounting $6000
21. Landscaping $ 2400
22. Maintenance $1200

The amount for landscaping includes $800 for maintaining the Brock's personal residence. The utilities include $2,000 of oil that was delivered to the Brock's house.

Explanation / Answer

Tier 1 is Capital Exp Tier 2 is Expenses Tier 3 is Owner expenditur 11. Utilities $6,000 - T2 (Of which 2000 is T3) 12. Insurance $3,500 - T2 13. Laabor (to stain/paint furniture) $9800 - T2 14. Property Taxes $5,000 - T2 15. Delivery truk(used truck) $9500 - T1 16. bank fees $2,000 - T2 17. telephone $2500 - T2 18. computer $1300 - T1 19. meals and entertainment $1800 - T3 20. Accounting $6000 = T2 21. Landscaping $ 2400 - T2 (of which 800 is T3) 22. Maintenance $1200 - T2

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