Ajax Computer Company Is an Accrual Method Calendar Year Taxpayer

question 52

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 for advertising time during a professional golf tournament which will occur once 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

---

Definitions:

Compensation Strategy

The design and implementation of pay structures and benefits aimed at achieving an organization’s objectives and attracting, motivating, and retaining employees.

Employee Benefits

Various non-wage compensations provided to employees in addition to their normal wages or salaries, such as health insurance, paid vacations, and retirement plans.

Promotion Criteria

The standards and requirements that an employee must meet or exceed to be considered for advancement within an organization.

Chief Executive Officer

The highest-ranking executive in a company, responsible for making major corporate decisions, managing overall operations, and communicating with the board of directors.