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Crystal Operates a Business That Provides Typing and Delivery Services

question 26

Essay

Crystal operates a business that provides typing and delivery services. This year, Crystal spent $2,500 to purchase special shirts that identify her employees and provide some notoriety for her business. The shirts are especially colorful and include logos on the front pocket and the back. Besides salary payments, Crystal also compensates her employees by offering to pay whole life insurance premiums for any that want to provide insurance coverage for their beneficiaries. This year, Crystal paid $5,000 in life insurance premiums. What amount of these payments can Crystal deduct? Crystal is on the cash method and calendar year.


Definitions:

Coupon Rate

The interest rate stated on a bond or other fixed income security that the issuer promises to pay annually or semi-annually.

Callable Bonds

Bonds that can be redeemed by the issuer before their maturity date, at a specified call price.

Market Interest Rate

The prevailing rate of interest available in the marketplace on comparable debt instruments, influencing the rates borrowers pay and lenders receive.

Coupon Rate

This rate is the yearly percentage of interest that a bond yields, calculated as a percentage of the bond's principal amount.

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