Seo is 30 years old. During the current year of assessment, he entered into an agreement for his business that gave him the right to purchase stationery for R15 000. This stationery normally costs R24 000. Leo has not exercised the option by the end of the year of assessment. YOU ARE REQUIRED to determine how much of the expense in terms of the general deduction formula can Leo claim?

 a.R9 000 - Leo can only claim the difference between the normal price and the agreed upon price because he only entered into an agreement that gave him the right to purchase stationery and has not yet has not exercised his option.

b.R24 000 - The stationery is an expenditure actually incurred in the production of income that is not capital in nature. Therefore, Leo can claim the full normal price.

c.R15 000 - The stationery is an expenditure actually incurred in the production of income that is not capital in nature. Leo entered into an agreement that gave him the right to purchase stationery. Therefore, he can only claim the agreement price.

d.R0 - The stationery is not an expense that has actually been incurred because Leo has not exercised his option.

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