George and Jeannie Want to Open a Restaurant

question 4

Essay

George and Jeannie want to open a restaurant. They contribute $3,000 each for a survey to locate an appropriate area for their restaurant and $2,000 each for a real estate agent to locate a suitable building for them to buy. Shortly after this, Jeannie and George have a disagreement and Jeannie walks away from the plan. Although she asks George to reimburse her, he refuses. George then continues the project by himself. He spends $4,000 for legal and accounting fees to set the business up and $8,000 for staff training. What are the tax consequences to George and Jeannie for these expenditures when the restaurant opens in July?

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Definitions:

Atmospheric Pressure

The pressure exerted by the weight of the atmosphere, crucial for weather patterns and breathing.

Sea Level

The average level of the surface of the ocean at any given place, used as a standard in calculating land elevation and water depth.

Hydraulic Pressure

The pressure exerted by a fluid in a hydraulic system, used to generate force and motion in hydraulic machinery and tools.

Steering Systems

Mechanisms in vehicles that allow the driver to guide and direct the direction of the vehicle.