Judy, a calendar year cash basis taxpayer, owns and operates several TV rental o

Question

Judy, a calendar year cash basis taxpayer, owns and operates several TV rental outlets in North Carolina and wants to expand into the TV rental business in South Carolina and Georgia. During 2012, she spends $30,000 to investigate TV rental businesses in South Carolina and $15,000 to investigate TV rental businesses in Georgia. She acquires the South Carolina operations, but not the outlets in Georgia. As to these expenses, Judy should:

amortize $30,000 over 60 months and capitalize $15,000.
expense $45,000 for 2012.
expense $15,000 for 2012 and capitalize $30,000.
capitalize $45,000.
None of the above

Explanation / Answer

expense $45,000 for 2012.

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