With respect to the following costs, first identify if the expenditure is a business or investment expenditure. Then, discuss whether each is an expense or capital expenditure.

 

Taxpayer owns and operates a small diner. This year she changed the decorating motif from southern country to French antique. As part of the redesign, she painted the walls and purchased new window treatments, artwork, centerpieces, lamps, tablecloths, place mats, plates, silverware, and glasses. She spent $10,000 on the new items.

 

Taxpayer owns a lot of stock. He has subscriptions to the Wall Street Journal.

 

Taxpayer owns a recording studio. This year she updated the studio’s recording equipment, paying $50,000 for the equipment.

 

Taxpayer hired a manager to manage his rental properties, paying the manager $40,000 per year.

Answer rating: 100% (QA)

Classification of Taxpayers Expenditures Scenario 1 Redesigning the Diner Business Expenditure This qualifies as a business expenditure because its di... View the full answer