Which of the following statements is correct in connection with the investigation of a business?
A)If the taxpayer is not already engaged in the trade or business, the expenses incurred are deductible if the project is abandoned.
B)If the business is acquired, the expenses may be deducted immediately by a taxpayer engaged in a similar trade or business.
C)That business must be related to the taxpayer's present business for any expense ever to be deductible.
D)Regardless of whether the taxpayer is already engaged in the trade or business, the expenses must be capitalized and amortized.
E)None of the above.

Question

Quizplus · Accepted Answer

According to IRS regulations, if a taxpayer acquires a business that is similar in nature to their current trade or business, they may deduct the investigation expenses immediately as ordinary and necessary business expenses. Option A is incorrect because if the project is not related to the taxpayer's current business and is abandoned, the expenses are not deductible. Option C is incorrect because the business being investigated must only be similar to the taxpayer's current business, not necessarily related. Option D is also incorrect because investigation expenses can be deductible under certain circumstances. Therefore, option B is the correct statement.

Which of the Following Statements Is Correct in Connection with the Investigation