In 2014, Jim opens a pizza parlor. In January, he has the following expenses:

$5,000 in advertising

$8,000 in training employees

$12,000 in structural renovations to the restaurant.

In March, John has the following additional expenses:

$7,000 in employee salaries

$2,000 in additional advertising

$1,000 for miscellaneous supplies, expect to be consumed within 12 months.

$1000 to replace the filters in the air conditioning units.

Jim opened for business on March 1, 2014 but did not receive any clients until April 1.

1. How much is Jim's allowable 2014 deduction for these expenditures?

b. Assume that three years later Jims pizza parlor goes bankrupt and was under formal bankruptcy proceedings. He decides to pay off his creditors out of his personal bank account, although he was under no legal obligation to do so. What are the tax consequences to Jim for these payments?