Using the tests for deductibility discussed in Chapter 5,explain why the following expenses may not be fully deductible inthe current year
a. Janet pays $900 in interest on debt she incurred to purchasemunicipal bonds. The bonds pay $1,500 of interest in the currentyear.
b. Andrew owns a retail-clothing store. Andrew has theopportunity to obtain a franchise to operate a discount sportinggoods store. He spends $5,000 investigating the possibility ofopening a sporting goods store in a neighboring town.
c. Jane owns a fitness center. She employs the star basketballplayer at Local University as an aerobics instructor. Because ofhis reputation, she pays him $20 an hour. Jane pays her otheraerobics instructors $10 an hour.
d. Alvin makes a vacation trip to Florida, and while therespends two days investigating the feasibility of opening up a newoffice of his optometry practice.
Using the tests for deductibility discussed in Chapter 5,explain why the following expenses may not be fully deductible inthe current year
a. Janet pays $900 in interest on debt she incurred to purchasemunicipal bonds. The bonds pay $1,500 of interest in the currentyear.
b. Andrew owns a retail-clothing store. Andrew has theopportunity to obtain a franchise to operate a discount sportinggoods store. He spends $5,000 investigating the possibility ofopening a sporting goods store in a neighboring town.
c. Jane owns a fitness center. She employs the star basketballplayer at Local University as an aerobics instructor. Because ofhis reputation, she pays him $20 an hour. Jane pays her otheraerobics instructors $10 an hour.
d. Alvin makes a vacation trip to Florida, and while therespends two days investigating the feasibility of opening up a newoffice of his optometry practice.
