Toni owns a gourmet dog treat shop downtown. She spends $2,800 investigating opening another dog treat shop in Northtown and an additional $3,100 investigating a new location in Southtown. Toni does open the Northtown shop, but does not open the Southtown shop.
A. Both the Northtown and the Southtown investigation costs are currently deductible.
B. Toni must capitalize and amortize the Northtown investigation costs, but can immediately deduct the Southtown investigation costs.
C. Both the Northtown and the Southtown investigation costs must be capitalized and amortized.
D. Toni must capitalize and amortize the Northtown investigation costs, but the Southtown investigation costs are not deductible at all.
Answer: A
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