“Business Expenditures and Deductions” Please respond to the following:

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Jane’s Air Conditioning Service decided that this year was the year to

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“take over” the air conditioning business in her town. Beginning in

January, she started advertising her business (even though there was

snow on the ground), bought a supply of Freon, updated her vehicles and

bought new uniforms for her service technicians who were making house

Jane comes to you to determine how to optimize her

deductions in order to reduce her tax liability. What advice would you

give her as to the expenditures above (assuming they all took place in

the same year)? Be sure to also explain what may (or may not) be

capitalized and/or deducted.


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