Problem 6-42 (Algorithmic) (LO. 3) Henrietta, the owner of a very successful hotel chain in the Southeast, is exploring the possibility of expanding the chain into a city in the Northeast. She incurs $63,500 of expenses associated with this investigation. Based on the regulatory environment for hotels in the city, she decides not to expand. During the year, she also investigates opening a restaurant that will be part of a national restaurant chain. Her expenses for this are $53,200. She proceeds with opening the restaurant, and it begins operations on May 1. Determine the amount that Henrietta can deduct in the current year for investigating these two businesses In your computations, round the per-month amount to the nearest dollar and use rounded amount in subsequent computations. a. The deductible amount of investigation expenses related to expansion of her hotel chain into another city: $ 63,500 b. The deductible amount of investigation expenses related to opening a restaurant: $ 4084 X Feedback Check My Work Investigation expenses are expenses paid or incurred to determine the feasibility of entering a new business or expanding an existing business. They include such costs as travel, engineering and architectural surveys, marketing reports, and various legal and accounting services. How such expenses are treated for tax purposes depends on a number of variables, including the following: (1) The current business, if any, of the taxpayer, (2) The nature of the business being investigated, (3) The extent to which the investigation has proceeded and (4) Whether the acquisition actually takes place. Problem 6-42 (Algorithmic) (LO. 3) Henrietta, the owner of a very successful hotel chain in the Southeast, is exploring the possibility of expanding the chain into a city in the Northeast. She incurs $63,500 of expenses associated with this investigation. Based on the regulatory environment for hotels in the city, she decides not to expand. During the year, she also investigates opening a restaurant that will be part of a national restaurant chain. Her expenses for this are $53,200. She proceeds with opening the restaurant, and it begins operations on May 1. Determine the amount that Henrietta can deduct in the current year for investigating these two businesses In your computations, round the per-month amount to the nearest dollar and use rounded amount in subsequent computations. a. The deductible amount of investigation expenses related to expansion of her hotel chain into another city: $ 63,500 b. The deductible amount of investigation expenses related to opening a restaurant: $ 4084 X Feedback Check My Work Investigation expenses are expenses paid or incurred to determine the feasibility of entering a new business or expanding an existing business. They include such costs as travel, engineering and architectural surveys, marketing reports, and various legal and accounting services. How such expenses are treated for tax purposes depends on a number of variables, including the following: (1) The current business, if any, of the taxpayer, (2) The nature of the business being investigated, (3) The extent to which the investigation has proceeded and (4) Whether the acquisition actually takes place
