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:

Synaptic Cleft

The gap between two nerve cells across which neurotransmitters are released to transmit nerve impulses.

Postsynaptic Membrane

The cell membrane opposite the synaptic cleft that receives and responds to neurotransmitters from the presynaptic neuron.

Neuron

A specialized cell transmitting nerve impulses; a nerve cell.

Axon

The long, slender projection of a nerve cell, or neuron, that conducts electrical impulses away from the neuron's cell body.