Research Problem 1- Your client, Dave’s Sport Shop

Research Problem 1. Your client, Dave’s Sport Shop, sells sports equipment and clothing in three retail outlets in New York City. Earlier this year, the CFO decided that keeping track of inventory using a combination of QuickBooks and Excel was not an efficient way to manage the stores’ inventories. So Dave’s purchased an inven- tory management system for $9,000 that allowed the entity to keep track of inven- tory, as well as automate ordering and purchasing, without replacing QuickBooks for its accounting function.

The CFO would like to know whether the cost of the inventory management pro- gram can be expensed in the year of purchase. Write a letter to the CFO, Cassandra Martin, that addresses the tax treatment of purchased software. Cassandra’s mailing address is 867 Broadway, New York, NY 10003.