Last year, Manabee Inc. leased a computer system from ICS Company for five years. After using the system for only 10 months, Manabee realized that it was no longer adequate for its expanding business needs. As a result, Manabee negotiated with ICS to terminate the original lease and enter into a new five-year lease under which ICS would provide Manabee with an expanded, upgraded computer system. ICS would not agree to the arrangement unless Manabee paid a $200,000 lease cancellation fee. Can Manabee deduct this fee as a current expense, or must Manabee capitalize the fee as a leasehold cost and amortize it over the five-year term of the new lease?
Answer to relevant QuestionsPeter Nelson is employed full time as an accountant by an insurance company. In his spare time, he operates a secondary business as a self-employed wedding photographer. On January 3 of the current year, Peter purchased new ...Mr. S paid $16,600 cash for a tangible asset for use in his new business. The asset is three-year recovery property. Before consideration of any cost recovery deduction, the business generated a net loss this year (year 0). ...Distinguish between a firm’s tax basis in an asset and its equity in that asset. Firm J sold marketable securities to Company b. Firm J’s tax basis in the securities was $45,250. Compute Firm J’s recognized gain or loss if: a. The selling price was $60,000, and Firm J and Company B are unrelated ...Zeno Inc. sold two capital assets in 2015. The first sale resulted in a $53,000 capital loss, and the second sale resulted in a $25,600 capital gain. Zeno was incorporated in 2011, and its tax records provide the following ...
Post your question