Davis Owns and Operates a Convenience Store on the North

question 78

Multiple Choice

Davis owns and operates a convenience store on the north side of the city. He has always wanted to operate a sports bar. When he hears of a new shopping center development in the south part of the city, he contacts the developer and begins negotiations to open his dream enterprise.
I.If negotiations are successful and Davis incurs $40,000 in start-up costs to open his new business, he can deduct up to $5,000 of the start-up costs and must capitalize the costs of investigation and start-up exceeding $5,000.
II.If Davis decides not to open his bar and restaurant, the investigation expenses are fully deductible.
​

• A)Only statement I is correct.
• B)Only statement II is correct.
• C)Both statements are correct.
• D)Neither statement is correct.

---

Definitions:

Coercive Appeal

Advertising or promotional tactics that use pressure or threats, subtly or overtly, to influence consumers' purchasing decisions.

Guilt Appeal

A marketing strategy that attempts to motivate consumers to take action by invoking feelings of guilt over social, environmental, or personal issues.

Fear Appeal

A persuasive communication technique that utilizes fear to motivate the audience towards a specific behavior by highlighting potential negative outcomes.

Advertising Messages

The core content or information conveyed in promotional materials to inform, persuade, or remind customers about products or services.