For Each of the Following Situations, Determine Whether the Item

question 49

Essay

For each of the following situations, determine whether the item is deductible, how it would be deducted on the taxpayer's return (if there are alternatives possible, discuss the conditions which would determine the treatment) and any limitations which might be placed on the deduction.
a.Cassie sells insurance and other financial products for Bison Assurance Company. During the current year, she gives each client who has been with her for three years 2 tickets to a Willie Nelson concert. The tickets have a face value of $75 each, but Cassie has to pay $100 per ticket to obtain a block of 100 tickets. Cassie was out of town and did not attend the concert.
b.Randolph was the CEO and chairman of the board of directors of Vison Inc., until his retirement 5 years ago. Although he still owns 5% of Vison's stock, he has no other active involvement in the company. While playing golf one day he learns that 4 of the company's biggest customers are coming to town to close a big deal. Randolph had been responsible for bringing 3 of the customers to the business 30 years earlier when he started working for the company. Because he has developed a solid business relationship with them through the years and to help the company out, he holds a reception for the 4 customers and top executives of the company at his country club. The cost of the reception is $2,000. Randolph did not ask for, nor did Vison offer, a reimbursement for the reception.
c.Ai-leng is an engineer employed by Boiler Corporation. While having lunch with one of Boiler's clients, she learns of a new relaxation technique that the client felt had greatly reduced his job-related stress. Ai-leng enrolls in a night course at the local community college to learn the new relaxation technique. The cost of the course is $200.

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Definitions:

Commonality of Databases

The practice of using uniform database structures across different applications or systems within an organization, to enhance data consistency and accessibility.

Strategic Advantage

A position of superiority or advantageous condition that a business holds over its competitors, often achieved through innovation, quality services, or cost leadership strategies.

Dependent Demand Technique

A method used in material requirements planning that calculates the need for components based on the demand for the final products they contribute to.

Bill of Material

A comprehensive list of materials, components, and instructions required to construct, manufacture, or repair a product or service.