Ronald is a cash-method taxpayer who made the following expenditures this year. Which expenditure is completely deductible in this period as a business expense?
A)$4,000 for rent on his office, which covers the next 24 months.
B)$3,000 for a new watch for the mayor to keep "good relations" with city hall.
C)$2,500 for professional hockey tickets distributed to a customer to generate "goodwill" for his business.
D)$55 to collect an account receivable from a customer who has failed to pay for services rendered.
E)None of the choices are completely deductible.

Question

Quizplus · Accepted Answer

The only expenditure that is completely deductible as a business expense is collecting an account receivable from a customer who has failed to pay for services rendered. The other options involve expenses for rent, personal gifts, and entertainment, which have limitations on their deductibility for tax purposes.

Ronald Is a Cash-Method Taxpayer Who Made the Following Expenditures