Blaze operates a restaurant in Cleveland. He travels to Columbus to investi - gate acquiring a business. He incurs expenses as follows: $1,500 for travel, $2,000 for legal advice, and $3,500 for a market analysis. Based on the different tax consequences listed below, describe the circumstances that were involved in Blaze's investigation of the business. a. Blaze deducts the $7,000 of expenses. b. Blaze cannot deduct any of the $7,000 of expenses. c. Blaze deducts $5,000 of the expenses and amortizes the $2,000 balance over a period of 180 months.

Question

Business

Aiden Mercer

12 June, 00:01

Blaze operates a restaurant in Cleveland. He travels to Columbus to investi - gate acquiring a business. He incurs expenses as follows: $1,500 for travel, $2,000 for legal advice, and $3,500 for a market analysis. Based on the different tax consequences listed below, describe the circumstances that were involved in Blaze's investigation of the business. a. Blaze deducts the $7,000 of expenses. b. Blaze cannot deduct any of the $7,000 of expenses. c. Blaze deducts $5,000 of the expenses and amortizes the $2,000 balance over a period of 180 months.

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Answers (1)

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Daisy · Answer 1

Answer: The following assumptions will be made as per the tax laws

Explanation:

1. As the expenditure made by blaze was to enquire about the business operation similar to his, therefore the expenditure is eligible for deduction.

2. If Blaze would not be inquiring about a restaurant or would also not acquire it later. Then the expenditure would not be eligible for deduction.

3. If Blaze would not have been in the restaurant business but eventually purchases the business he was inquiring about then he can claim $5000 expenses before and the $2000 deduction later.