Hollis operates a lawn care service in southeastern Missouri.He incurs $63,000 of expenses determining the feasibility of expanding the business to southwestern Missouri.If he expands the business,the $63,000 is deductible in the current year.If he does not do so,then he must amortize the $63,000 over a 180-month period.

Question

Quizplus · Accepted Answer

The $63,000 expense incurred for determining the feasibility of expanding the business cannot be deducted currently, and must be amortized over a 180-month (15-year) period if the expansion does not happen. This is in accordance with the IRS rules on capital expenditures.

Hollis Operates a Lawn Care Service in Southeastern Missouri