Answer Happy

7. Describe the book/tax difference resulting from each of the following transactions: a. Firm A spent $430 on a business dinner attended by the firm's vice president and a potential client. b. Firm B borrowed $50,000 and invested the loan proceeds in tax-exempt City of Los Angeles bonds. This year, Firm B paid $2,800 interest on the loan and earned $3,500 interest on the bonds. c. Firm C sent its president and several other key employees to Washington, D.C., to lobby a group of senators to enact legislation that would be extremely beneficial for the firm's business. The cost of this trip was $7,400. While in the capital city, the president attended a "$10,000 a plate" fundraising dinner sponsored by one sena- tor's reelection committee.