Question
Please help answer these tax questions and show thinking, thank you1 2. George owns and operates several boutiques in town. He wants to expand his
Please help answer these tax questions and show thinking, thank you1
2. George owns and operates several boutiques in town. He wants to expand his business to other cities, so he incurs $23,000 on investigation costs travelling to different cities and paid $30,000 for market studies in these cities to determine the feasibility of opening boutiques. If George decides to open a new boutique in another city, how much of the investigation and market study costs can George deduct in the current year, if he opens the new store on November 1? $_______
3. Meow runs an illegal gambling operation. He incurred $12,000 for rent, $4,000 for utilities, $500 payments to the police to encourage them to not cite the business with a violation, $50,000 for wages to employees, $5,000 contribution to the political campaign for a Congress person, who advocates the legalization of gambling in the state. If Meow has $200,000 of revenue for the current year, how much of these costs are deductible for federal tax purposes? $______________
4. What if instead, Meow ran a drug trafficking business, and the cost of the drugs sold this year was $100,000 (all other costs are the same as those noted in question 3 previously), how much of the costs incurred during the current year would be deductible by the business?
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