With respect to deductions in the determination of net business income for tax purposes, which of the following statements is correct?

Question

Quizplus · Accepted Answer

The cost of sales can be determined using inventory valuation based on either replacement cost or net realizable value, as per generally accepted accounting principles (GAAP) and tax regulations. Option A is incorrect because costs of issuing new common shares are considered capital expenditures and are not deductible for tax purposes. Option B is incorrect because any premium on the sale of new debt securities is amortized over the life of the securities using the effective interest method. Option D is incorrect because landscaping costs are considered capital expenditures and are not deductible for tax purposes, but can be depreciated over their useful life.

With Respect to Deductions in the Determination of Net Business