Desi Corporation Incurs $5,000 in Travel,market Surveys,and Legal Expenses to Investigate

question 58

Essay

Desi Corporation incurs $5,000 in travel,market surveys,and legal expenses to investigate the feasibility of opening a new coffee house in one of the new suburban malls in town.Desi already owns a similar coffee house across town.
a.What is the proper tax treatment of these expenses if Desi decides not to open the new coffee house?
b.What is the proper tax treatment of these expenses if Desi decides to open the new coffee house?
c.Assume that Desi Corp is currently in the cleaning services business and incurs the noted expenses.because it is considering opening a coffee house.Reconsider your responses to parts a and b.

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Definitions:

Implicit Support

The unspoken or indirect backing or endorsement of an idea, person, or cause.

Explicit Support

Direct and clear endorsement or approval of an idea, individual, or action without ambiguity.

Stressor

A stressor is any external or internal factor that causes stress to an individual, potentially affecting their mental and physical health.

Effective Communication

The process of exchanging information or ideas in a way that is received and understood as intended.