Ajax Computer Company is an accrual-method calendar-year taxpayer. Ajax has never advertised in the national media prior to this year. In November of this year, however, Ajax paid $1 million for television advertising time during a "super" sporting event scheduled to take place in early February of next year. In addition, in November of this year the company paid $500,000 fora one-time advertising blitz during a professional golf tournament in April of next year. What amount of these payments, if any, can Ajax deduct this year?
A)$1 million
B)$500,000
C)$1.5 million
D)$1.5 million only if the professional golf tournament is played before April 15
E)No deduction can be claimed this year

Question

Quizplus · Accepted Answer

The Answer of Ajax Computer Company is an accrual-method calendar-year taxpayer. Ajax has never advertised in the national media prior to this year. In November of this year, however, Ajax paid $1 million for television advertising time during a "super" sporting event scheduled to take place in early February of next year. In addition, in November of this year the company paid $500,000 fora one-time advertising blitz during a professional golf tournament in April of next year. What amount of these payments, if any, can Ajax deduct this year?
A)$1 million
B)$500,000
C)$1.5 million
D)$1.5 million only if the professional golf tournament is played before April 15
E)No deduction can be claimed this year

Ajax Computer Company Is an Accrual-Method Calendar-Year Taxpayer