Problem:
American Healthcare (AH), an insurance company, is trying to persuade Congress to enact nationwide anti-smoking legislation. As part of this effort, AH paid $500,000 to hire a lobbying firm to discuss its concerns with members of Congress. AH also contributed $100,000 to candidates for political office who support limiting public smoking.
Required:
Question: What amount of these expenditures can AH deduct?
- $0
- $100,000
- $500,000
- $600,000
Note: Be sure to show how you arrived at your answer.