Ajax Computer Company Is an Accrual Method Calendar Year Taxpayer

question 52

Multiple Choice

Ajax Computer Company is an accrual method calendar year taxpayer. Ajax has never advertised in the national media prior to this year. In November of this year, however, Ajax paid $1 million for television advertising time during a "super" sporting event scheduled to take place in early February of next year. In addition, in November of this year the company paid $500,000 for advertising time during a professional golf tournament which will occur once in April of next year. What amount of these payments, if any, can Ajax deduct this year?

• A) $1 million
• B) $500,000
• C) $1.5 million
• D) $1.5 million only if the professional golf tournament is played before April 15
• E) No deduction can be claimed this year

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Definitions:

HSV-2

Herpes Simplex Virus type 2, a sexually transmitted infection that primarily causes genital herpes, characterized by outbreaks of sores and blisters.

Scabies

A red, intensely itchy rash appearing on the genitals, buttocks, feet, wrists, knuckles, abdomen, armpits, or scalp, caused by the barely visible mite Sarcoptes scabiei.

Mites

Tiny arthropods, some of which are known to cause allergies or skin conditions in humans and animals.

Genital Candidiasis

A fungal infection caused by yeasts that belong to the genus Candida, affecting the genital area, commonly known as a yeast infection.