Documentation expenses related to the copy acquisition, 1.5M • Operational loss (studio time lost etc.), 3M • Massive advertising campaign to launch the artist, 1.5M

SWFT Individual Income Taxes
43rd Edition
ISBN:9780357391365
Author:YOUNG
Publisher:YOUNG
Chapter14: Property Transactions: Determination Of Gain Or Loss And Basis Considerations
Section: Chapter Questions
Problem 31P
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On January 2, 2019, Born for you Inc. acquired copy rights to the original recording
of a famous singer named Aina Lorraine. The agreement with the singer allows the company to
record and rerecord the songs of the singer for a period of 5 years. During the initial 6 month
period of the agreement, the singer was very sick and consequently cannot record. The studio
time that was blocked by the company had to be paid even during the period the singer could
not sing. The following costs were incurred by the company:
• Legal cost of acquiring the copy rights, P15M
This is your personal copy. Do not upload/share to any unauthorized sites/groups without your teacher’s
permission. Thank you.
• Documentation expenses related to the copy acquisition, 1.5M
• Operational loss (studio time lost etc.), 3M
• Massive advertising campaign to launch the artist, 1.5M

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