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

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Definitions:

Annuity Due

An annuity payment arrangement where payments are made at the beginning of each period, as opposed to the end, which is the case with an ordinary annuity.

Return Requirement

A specified rate of return that investors expect to receive from an investment.

Over-Valued

A term describing an asset or security whose price is considered higher than its underlying value or fundamentals justify.

Compounded Continuously

The process of calculating interest on an investment or loan in such a way that the interest itself earns interest, occurring an infinite number of times per period.