Answer:
Snowman Expenses:
a) Income Tax deductible expenses:
Payment for 400 cases of beer = $10,000
Payment for fuel = $650
Total = $10,650
b) The expenses above are allowable because they are "ordinary and necessary expenses incurred in carrying on any trade or business." IRS Code 162.
c) The bribe paid to the Sheriff of $1,000 is not allowable under the same code.
d) Such payments are not allowable because, according to IRS Code 162 section C: 1 and 2, they are described as "Illegal bribes, kickbacks, and other payments" and "other illegal payments."
Step-by-step explanation:
a) According to the Internal Revenue Code 162 which details trade or business expenses, section A specifically state that "There shall be allowed as a deduction all the ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business, including—
(1)a reasonable allowance for salaries or other compensation for personal services actually rendered;
(2)traveling expenses (including amounts expended for meals and lodging other than amounts which are lavish or extravagant under the circumstances) while away from home in the pursuit of a trade or business; and ..."
b) Bribes are illegal payments prohibited by states law. Snowman paid the payment in order not to get his vehicle impounded and himself imprisoned, according to the Sheriff's threats. That he was over-speeding in order to meet his business appointment does not guarantee him the right to bribe a government official.
