Question

Henrietta, the owner of a very successful hotel chain in the Southeast, is exploring the possibility of expanding the chain into a city in the Northeast. She incurs $35,000 of expenses associated with this investigation. Based on the regulatory environment for hotels in the city, she decides not to expand. During the year, she also investigates opening a restaurant that will be part of a national restaurant chain. Her expenses for this are $53,000. She proceeds with opening the restaurant, and it begins operations on September 1. Determine the amount Henrietta can deduct in the current year for investigating these two businesses.

Answer 1

Answer:

Henrietta can deduct $35,000 for the expenses which she has incurred for the investigation.

Explanation:

Henrietta has incurred expenses for investigating the expenses about opening a new restaurant. She has incurred $35,000 of expense for the investigation about the expansion of its business. She can deduct this expense from her current business.