Gary, a sole proprietor, incurs the following expenses in his record store business. Gary can deduct the following as business expenses in the current year
I.$3,000 in legal fees to acquire a competing record store.
II.$500 to the local police chief to not write parking tickets to his customers whose time ran-out on parking meters in front of his store.

Question

Gary, a sole proprietor, incurs the following expenses in his record store business. Gary can deduct the following as business expenses in the current year
I.$3,000 in legal fees to acquire a competing record store.
II.$500 to the local police chief to not write parking tickets to his customers whose time ran-out on parking meters in front of his store.
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Quizplus · Accepted Answer

Legal fees to acquire a business are capital expenses, not deductible as current business expenses. Payments to a police chief to avoid tickets are illegal and not deductible.

Gary, a Sole Proprietor, Incurs the Following Expenses in His