Mary operates a successful bicycle shop as a sole proprietor. After several years of profits, in 2020 she decided to branch out and turn her baking hobby into a business by opening a cupcake shop. She spent a total of $52,560 on securing a lease for a prime location (real estate agent’s and attorney’s fees), training em-ployees, and pre-opening advertising. She opened “BabyCakes” on May 1, 2020. In preparing a Schedule C to be included with Mary’s 2020 return, you included $___ as a deduction for start-up costs. Your task: State and explain the correct amount of Mary’s 2020 start-up costs deduction.
Mary operates a successful bicycle shop as a sole proprietor. After several years of profits, in 2020 she decided to branch out and turn her baking hobby into a business by opening a cupcake shop. She spent a total of $52,560 on securing a lease for a prime location (real estate agent’s and attorney’s fees), training em-ployees, and pre-opening advertising. She opened “BabyCakes” on May 1, 2020. In preparing a Schedule C to be included with Mary’s 2020 return, you included $___ as a deduction for start-up costs. Your task: State and explain the correct amount of Mary’s 2020 start-up costs deduction.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Mary operates a successful bicycle shop as a sole proprietor. After several years of profits, in 2020 she decided to branch out and turn her baking hobby into a business by opening a cupcake shop. She spent a total of $52,560 on securing a lease for a prime location (real estate agent’s and attorney’s fees), training em-ployees, and pre-opening advertising. She opened “BabyCakes” on May 1, 2020. In preparing a Schedule C to be included with Mary’s 2020 return, you included $___ as a deduction for start-up costs.
Your task: State and explain the correct amount of Mary’s 2020 start-up costs deduction.
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