David Purchases a Yacht Solely for the Purpose of Entertaining

question 100

Essay

David purchases a yacht solely for the purpose of entertaining real estate clients. He wishes to position himself as a high-end real estate salesperson specializing in very expensive residences and uses the yacht only for business entertainment. During 2014, his expenses for maintaining the yacht, including depreciation, were $28,000. In addition, he incurred $9,000 of catering expenses for meals he provided to business clients on the yacht. What is David's tax deduction in 2014?
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Explain.

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Definitions:

Activity Variance

The difference between budgeted and actual cost or time spent on a particular activity, highlighting variances in performance.

Beta Distribution

A family of continuous probability distributions defined on the interval [0, 1] used to model a variety of variables that are bounded on both sides.

Project Management

The application of knowledge, skills, tools, and techniques to project activities to meet the project requirements.

Expected Activity Times

The average durations that tasks or activities are anticipated to take, often used in project management and planning.