Jack owns a local carpeting business in Portland. The business is comprised of 3 employees, not including Jack. At year-end, Jack is preparing his own business taxes, for which he needs to figure out which business expenses are deductible and which should be capitalized. Jacks business incurs the following expenses: - Life insurance policies were taken out in the amount of $3,000 per employee (excluding Jack), Jack is the beneficiary of these policies. - State and local sales taxes pertaining to the purchase of a long-lived capital asset during the year totaling $6,200 were paid. - State and local real estate and personal property taxes in the amount of $5,100 were paid. - One of Jacks clients failed to pay their bill in a timely manner, and Jack decided to sue them on behalf of the business. Attorney fees in regards to this matter totaled $2,500.

In total, how much can Jack deduct for his business in regards to the previous statements? What amount should be capitalized to the property of the business?

Answer rating: 100% (QA)

To determine the deductible expenses and the amount to be capitalized for Jacks carpeting business l... View the full answer