During june and july of the current year, ace bowling incurs $5,000 in travel an

Question

During june and july of the current year, ace bowling incurs $5,000 in travel and $2,000 in legal expenses to investigate the feaibility of opening a new bowling alley in New Hampshire. Ace bowling already owns 4 bowling alleys in MA and decided not to open the new hampshire alley. how much, if any of these expenses are deductible?

a none

b 7000

c 5000 with the remainder of 2000 to be capitalzied and amortized over 1800 months

d 2000 with reainded of 5000 to capitaziled and depreciated over 5 year

Explanation / Answer

b)$7000 is allowed as deductible expense as the same has been incurred for business purpose however capiaization is not permissible as no new asset is created.

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