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

question 112

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 $1.7 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 $1,200,000 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)$1.70 million
• B)$1.20 million
• C)$2.90 million
• D)$2.90 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:

Rapid Change

The quick and often significant transformation in the environment, technology, society, or economy that requires prompt adaptation.

Organization Development (OD)

An area of study and application aimed at improving the ability and knowledge of individuals to facilitate better change and outcomes within organizations.

Planned Change Programs

Organized efforts and strategies implemented within an organization to improve processes, systems, or behaviors in pursuit of enhanced performance and efficiency.

Tempered Radical

An individual within an organization who seeks to initiate change by promoting ideas or actions that significantly differ from the norm, without alienating themselves from the organization.