Which of the following trade or business expenditures of Arrow Inc.
are deductible on its current year tax return? If an expenditure is
not deductible, explain why it is not a valid deduction
Salaries and wages to employees $400,000
Purchase of new office building $250,000
Payment of illegal parking fines of president $1,400
Payment of wedding expenses for President's
daughter's wedding $16,000
Entertainment, expenses related to company business $25,000
Interest on money borrowed to buy tax-exempt securities $9,000
Total Expenditures $700,400
The detailed solution explains whether each of the items are tax deductible including reasons why some of the expenses are not allowable.