Refer to the Chapter 5 “Start-up Costs” discussion starting on page 5-19, and read the accompanying Examples 27, 28, and 29 very carefully. Dilly’s dream was to open a cookie shop, so she did her homework carefully be-fore finally opening “Dilly’s Delights” on July 1, 2019. Before that date, she had incurred the following “soft costs” – $12,000 realtor’s fee for finding a storefront to rent,$16,000 attorneys’ fees for negotiating a lease and trademark services,$8,000 wage expense for employees during the pre-opening period, and$18,000 for pre-opening TV and other advertising. Calculate and state the exact amount that you, in preparing Dilly’s 2019 return, will enter as her 2019 start-up costs deduction.

The deduction is allowed up to $5,000 of startup cost in the first year of the business. The…

Answered: Dilly’s dream was to open a cookie…

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter2: Basic Cost Management Concepts

Section: Chapter Questions

Problem 5CE: Jean and Tom Perritz own and manage Happy Home Helpers, Inc. (HHH), a house-cleaning service. Each...

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Refer to the Chapter 5 “Start-up Costs” discussion starting on page 5-19, and read the accompanying Examples 27, 28, and 29 very carefully.

Dilly’s dream was to open a cookie shop, so she did her homework carefully be-fore finally opening “Dilly’s Delights” on July 1, 2019. Before that date, she had incurred the following “soft costs” –

$12,000 realtor’s fee for finding a storefront to rent,
$16,000 attorneys’ fees for negotiating a lease and trademark services,
$8,000 wage expense for employees during the pre-opening period, and
$18,000 for pre-opening TV and other advertising.

Calculate and state the exact amount that you, in preparing Dilly’s 2019 return, will enter as her 2019 start-up costs deduction.

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