For Each of the Following Situations Explain Why the Expenditure

question 129

Essay

For each of the following situations explain why the expenditure is or is not deductible and any limitations that may be placed on the amount of the deduction.
a.Ellis is a part-time bookkeeper for Gilmore Company. The owner of Gilmore told Ellis that if he earns an accounting degree and passes the CPA exam, he would hire him as Gilmore's accountant. Ellis spends $5,600 taking classes towards an accounting degree at City College.
b.Harry owns Circus City Condiments, a wholesaler of circus food. In 2011 he loaned his friend Joanna $8,000 at 6% annual interest with the balance due in 5 years. Joanna used the loan to open a beauty salon. In December 2016, Joanna tells Harry that she has filed for bankruptcy and that he will be lucky to get $2,000 of his money back. The bankruptcy proceedings had not been completed at the end of 2016.
c.Audrey is a self-employed computer consultant. Harvey calls Audrey and asks her for information on installing a new Lan-based workstation system in his business. Audrey meets Harvey at Franco's Chop House. They have dinner while Audrey explains how such a system will work and what it will cost. Audrey pays for the dinner, which costs $100. Harvey calls Audrey the next day and tells her that he has decided that the system costs too much and that he will not need her services.

---

Definitions:

Pharynx

A muscular tube that connects the mouth and nasal passages with the esophagus and larynx, serving both respiratory and digestive systems.

Digestive System

A complex series of organs and glands responsible for the digestion, absorption of nutrients, and expulsion of waste.

Nasal Cavity

The large air filled space behind the nose, involved in respiration and sense of smell.