Aye Corp Purchases a Remote Site Building for Computer Operations

question 34

Multiple Choice

Aye Corp purchases a remote site building for computer operations. The building will be suitable for operations after some necessary expenditures. The wiring must be replaced to handle the computer specifications. The roof is leaking and must be replaced. All rooms must be repainted and re-carpeted and there will also be some updating of the plumbing needed. Which of the following statements is true?

• A)The cost of the building will not include the repainting and re-carpeting costs.
• B)The cost of the building will include the cost of replacing the roof.
• C)The cost of the building is the purchase price of the building, while the additional expenditures are all capitalized as Building Improvements.
• D)The wiring replacement will be part of the computer costs, not the building cost.

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Definitions:

Qualifying Expenses

Specific expenditures that meet the criteria set by tax laws or other regulations, often eligible for tax deductions or credits.

Retirement Savings Contributions Credit

A non-refundable tax credit given to eligible taxpayers who make contributions to qualified retirement accounts, aimed at encouraging retirement savings.

Modified Adjusted Gross Income

An individual's AGI with certain deductions added back in; used to determine eligibility for certain tax benefits.

Head of Household

A tax filing status for unmarried taxpayers who provide more than half the cost of maintaining a home for a qualifying person.