Jackie Recently Retired from the U

question 129

Multiple Choice

Jackie recently retired from the U.S. Coast Guard after 30 years of service. She would like to open a boat shop to operate in her retirement years. Jackie incurs $3,800 of expenses while investigating sites for her shop and while checking out boat franchises. What are the tax effects of the expenses Jackie incurs?
I.If Jackie enters the boat business, she can deduct the costs only by capitalizing them and amortizing them over 180 months.
II.They are not deductible if Jackie does not enter the ski and boat business.
​

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

---

Definitions:

Accumulated Depreciation

The total amount of depreciation expense that has been recorded against a fixed asset over its useful life.

Machinery and Equipment

Physical assets used in a business operation to produce goods or services, not including buildings or property.

Assessed Tax Valuation

The valuation placed on property by a public tax assessor for the purposes of taxation.

Financial Reporting

The process of producing statements that disclose an organization's financial status to management, investors, and the government.