Chapter 1, Problem 10P

Henrietta, the owner of a very successful hotel chain in the Southeast, is exploring the possibility of expanding the chain into a city in the Northeast. She incurs $60,000 of expenses associated with this investigation. Based on the regulatory environment for hotels in the city, she decides not to expand. During the year, she also investigates opening a restaurant that will be part of a national restaurant chain. Her expenses for this are $54,400. She proceeds with opening the restaurant, and it begins operations on May 1. Determine the amount that Henrietta can deduct in the current year for investigating these two businesses. In your computations, round the per-month amount to the nearest dollar and use rounded amount in subsequent computations. a.  The deductible amount of investigation expenses related to expansion of her hotel chain into another city? b.  The deductible amount of investigation expenses related to opening a restaurant?

Amee moved to the San Francisco Bay Area to work for a technology start-up 25 years ago. The start-up eventually went public, and Amee is now one of the company's most senior and successful employees. Amee has owned a house in Nob Hill for the past 20 years. Although she is grateful that the house has increased in value significantly while she has owned it, her property tax bill also has increased substantially. Given the $10,000 maximun regular tax deduction for state and local taxes imposed by the TCJA and the facts her property taxes create an AMT adjustment, Amee has decided that she would save a significant amount in AMT if she moved to a state with lower property taxes. Identify the flaw in Amee's logic with respect to the interaction of the $10,000 state and local tax deduction for regular tax purposes and the related AMT adjustment.