During November and December of last year,
StephenStephen's,
Inc., incurred the following expenses in investigating the feasibility of opening a new restaurant in town:
View the expenses.
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Question content area bottom
Part 1
Scenario a.
StephenStephen's,
Inc., already owns another restaurant in town and wants to expand.
StephenStephen's,
Inc. opens the new restaurant in
AprilApril
of the current year.
Under this scenario, Stephen's deduction =
$5,900
Part 2
Under this scenario, Stephen may deduct the amount in the
year incurred (last year).
Part 3
Scenario b. Assume that
StephenStephen's,
Inc. is in the book selling business, and it wants to move into the restaurant business. It opens the restaurant in
AprilApril
of the current year.
Under this scenario, Stephen's deduction =
$5,045
Part 4
Under this scenario Stephen may deduct the amount in the
current year.
Part 5
Scenario c. Same as Part b except
StephenStephen's
decides against opening a restaurant after the investigation.
A.
The expenses are deductible in the year incurred because
StephenStephen
is already a business owner.
B.
The fact that
StephenStephen
decides against opening a restaurant is not relevant.
StephenStephen
may deduct the same amount as in Part b in the current year.
Your answer is not correct.
C.
StephenStephen
may deduct all the expenses incurred in the current year because the decision of opening the business or not has been made in the current year.