Brenda left her babysitting job and opens a beauty salon. She purchases inventory supplies as well as various fixed assets. She advertises both on radio and TV. Since she really wants to get her salon noticed, she pays for a spot during the Super Bowl.

Does the advertising expense qualify under reasonable and necessary business expense? Why or why not?

Where on her tax form would Brenda take the advertising expense? Would Brenda's decision to use accrual or cash accounting impact her inventory? Why or why not?

When making a decision about a career in business, Mallory is considering becoming an executive. She has heard executives not only receive a base salary but great stock options as well. Many of her friends who are working as executives have complained about these so called perks as unfair tax advantages. However, another of her friends argues these salaries are excessive.

Do you agree with the statement? Why or why not?

Have tax regulations had any impact on executives' pay? Why or why not?