Ajax Computer Company Is an Accrual-Method Calendar-Year Taxpayer

question 36

Multiple Choice

Ajax Computer Company is an accrual-method calendar-year taxpayer. Ajax has never advertised in the national media prior to this year. In November of this year, however, Ajax paid $1 million for television advertising time during a "super" sporting event scheduled to take place in early February of next year. In addition, in November of this year the company paid $500,000 fora one-time advertising blitz during a professional golf tournament in April of next year. What amount of these payments, if any, can Ajax deduct this year?

• A)$1 million
• B)$500,000
• C)$1.5 million
• D)$1.5 million only if the professional golf tournament is played before April 15
• E)No deduction can be claimed this year

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Definitions:

Inconspicuous Level

A state or condition not clearly visible or attracting attention, often due to subtlety or understatement.

Best Chance

The most favorable or advantageous opportunity or possibility to achieve success or a desired outcome.

Job Opportunity

An available position of employment where an individual has the chance to apply for work that matches their skills and interests.

Approaching

The act of coming near or closer to something or someone in physical space or time.