Other Objective Questions
Designate whether the following expenses are fully deductible (F), partially deductible (P), or nondeductible (N) in the year paid.
-Matthew, a car dealer in Atlanta, wants to open a restaurant in Miami. He spends $8,000 investigating the location and feasibility of opening the restaurant in 2018, Matthew opens the restaurant in Miami in November and spends an additional $7,000 in start-up costs. In 2018 Matthew can:
A) Deduct the entire $15,000
B) Deduct $8,000 with the remaining $7,000 amortized over 15 years
C) Deduct $5,000 with the remaining $10,000 amortized over 15 years
D) Only amortize the entire $15,000 over 15 years

Question

Quizplus · Accepted Answer

The $8,000 spent investigating the location and feasibility of opening the restaurant is fully deductible in the year paid as a business expense. However, the $7,000 start-up cost must be amortized over 15 years, beginning in the month the business starts. Therefore, Matthew can deduct $5,000 of the start-up cost in the year paid and amortize the remaining $10,000 over the next 15 years.

Other Objective Questions Designate Whether the Following Expenses Are Fully Deductible (F), Partially