Iris, a Calendar Year Cash Basis Taxpayer, Owns and Operates

question 26

Multiple Choice

Iris, a calendar year cash basis taxpayer, owns and operates several TV rental outlets in Florida, and wants to expand to other states. During 2018, she spends $14,000 to investigate TV rental stores in South Carolina and $9,000 to investigate TV rental stores in Georgia. She acquires the South Carolina operations, but not the outlets in Georgia. As to these expenses, Iris should:

• A) Capitalize $14,000 and not deduct $9,000.
• B) Expense $23,000 for 2018.
• C) Expense $9,000 for 2018 and capitalize $14,000.
• D) Capitalize $23,000.
• E) None of the above.

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