Tommy, an automobile mechanic employed by an auto dealership, is considering opening a fast food franchise. If Tommy decides not to acquire the fast food franchise, any investigation expenses are:
A) A deduction for AGI.
B) A deduction from AGI, subject to the 2 percent floor.
C) A deduction from AGI, not subject to the 2 percent floor.
D) Deductible up to $5,000 in the current year with the balance being amortized over a 180-month period.
E) Not deductible.

Question

Quizplus · Accepted Answer

Investigation expenses for a potential new business venture are generally not deductible because they are considered personal expenses. Therefore, the best choice is E, which states that they are not deductible. None of the other choices are accurate regarding the deductibility of investigation expenses for a potential business venture.

Tommy, an Automobile Mechanic Employed by an Auto Dealership, Is