Tomas is thinking about starting or acquiring a new business.He is currently in the pie making business where his company bakes special order pies for parties and for grocery stores.The grocery store pies are mass produced as opposed to the special order pies.Tomas thinks that his business expertise will lend itself to a catering business.He has spent considerable time looking into the catering business, to determine whether he should buy an existing business or start his own.He has incurred legal fees from lawyers, and accountants fees for various advice with respect to the new venture.The legal and accounting fees to date have been $15,000.Tomas decides to start his own catering business and begins to work on getting the business up and running starting on September 1, 2012.He incurs the following costs during 2012. He loans some of his own pie staff to the new business in order to get it going.Tomas gets his first catering job on December 20, 2012.The catering salaries were incurred ratably throughout the period.Tomas hired his first staff in September.

Legal/accounting (same as above) $15,000

Incorporation costs $4,000

Loaning his pie staff time $10,000

Purchasing of catering equipment $50,000

Advertising $8,000

Salaries of newly catering staff $12,000

Truck purchase $25,000

Required: Decide what to do with each of the expenditures mentioned above for income tax purposes. Explain how much you think Tomas can deduct during 2012 and how much we will be able to deduct, if any, in future years.