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

question 26

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 $1.6 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 $1,100,000 for a 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) $1.60 million
• B) $1.10 million
• C) $2.70 million
• D) $2.70 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:

Night Terrors

Intense episodes of panic and fear that occur during non-REM sleep, often leaving the person with no memory of the event upon awakening.

Latent Content

According to Freud, the underlying meaning of a dream (as distinct from its manifest content).

Manifest Content

According to Freud, the symbolic, remembered story line of a dream (as distinct from its latent, or hidden, content).

Paradoxical Content

Refers to information or messages that contain seemingly contradictory elements which, upon closer examination, may reveal a deeper truth or insight.