Iris, a Calendar Year Cash Basis Taxpayer, Owns and Operates

question 52

Multiple Choice

Iris, a calendar year cash basis taxpayer, owns and operates several TV rental outlets in Florida, and wants to expand to other states. During 2017, she spends $14,000 to investigate TV rental stores in South Carolina and $9,000 to investigate TV rental stores in Georgia. She acquires the South Carolina operations, but not the outlets in Georgia. As to these expenses, Iris should:

• A)Capitalize $14,000 and not deduct $9,000.
• B)Expense $23,000 for 2017.
• C)Expense $9,000 for 2017 and capitalize $14,000.
• D)Capitalize $23,000.
• E)None of the above.

---

Definitions:

Grapevine

An informal communication network among people in an organization, not sanctioned by formal channels.

Information Filtering

The process of sifting through and reducing the volume of information available to focus on the most relevant or important details.

Informal Communication

The exchange of information, thoughts, or messages in an unofficial capacity, often through social interactions or casual means.

Climate for Voice

The organizational environment that encourages or discourages individuals from expressing ideas, opinions, and concerns.