Desi Corporation Incurs $5,000 in Travel, Market Surveys, and Legal

question 1578

Essay

Desi Corporation incurs $5,000 in travel, market surveys, and legal expenses to investigate the feasibility of open new coffee house in one of the new suburban malls in town. Desi already owns a similar coffee house downtown
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 i considering opening a coffee house. Reconsider your responses to parts a and b.

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Definitions:

Parasympathetic Division

A branch of the autonomic nervous system responsible for stimulating "rest-and-digest" or calming activities, reducing the body's stress response.

Autonomic Nervous System

The part of the nervous system that controls involuntary actions of the smooth muscles and heart and glands, regulating functions such as heart rate, digestion, respiratory rate, and pupillary response.

Sympathetic Division

Part of the autonomic nervous system that prepares the body for fight-or-flight responses, increasing heart rate and blood pressure, among other effects.

Overactive Thyroid

A condition, also known as hyperthyroidism, where the thyroid gland produces excessive amounts of thyroid hormones, leading to various health issues.