You are preparing the tax return of Bold Corporation, which had sales of $60 million. Bold made

Question:

You are preparing the tax return of Bold Corporation, which had sales of $60 million. Bold made a $1 million expenditure for which the appropriate tax treatment—deductible or capitalizable—is a gray area. Bold’s director of federal taxes and chief financial officer urgently wants to deduct the expenditure. What tax compliance issues should you consider in advising her?