How much of the expenditures can snidely limited deduct

Reference no: EM133672454

Discussion Post

I. Snidely Limited spent $1 million this year to upgrade its manufacturing plant, which had received sev-eral warnings from the state environmental agency about releasing pollution into the local river. Late in the year, Snidely received an assessment of $700,000 for violating the state's Clean Water Act. After he negotiated with the state, which cost $135,000 in legal fees, Snidely promised to spend another $200,000 next year for more pollution-control devices, and the fine was reduced to $450,000. How much of these expenditures can Snidely Limited deduct for tax purposes?

II. Steve is an usher at his local church. Can he deduct commuting expenses for the Sundays that he is assigned to usher for church services?

III. Your client, Teddy Chow, and his wife Abby filed a lawsuit to recover damages for personal injuries Teddy sustained in an auto accident in 2018. In 2019, a jury awarded Teddy $1.62 million in damages. In addition, delay damages in the amount of $1.08 million were then added to that award, resulting in a total judgment of $2.7 million. The defendants appealed the award, and while the appeal was pending, the parties reached a settlement, which provided for payment to Teddy of $2.55 million. In 2019, after attorney fees of $850,000 were subtracted, Teddy received $1.7 million. Teddy wants to know how these amounts are treated for tax purposes.After appropriate research, write a letter to Teddy and Abby explaining your findings.

Reference no: EM133672454

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