Charley Long is a truck driver, the 18-wheeler variety. He is an independent contractor for Fishy Co., a seafood company in Mobile, Alabama. Charley’s job entails delivering fresh fish to restaurants and wholesale fish distributors in Mississippi and Louisiana. Charley’s routine varied. Sometimes, he drives straight back to Mobile from Lafayette. On other occasions, he will pull of at a truck stop and sleep in his cab before returning to Mobile. His cab is equipped with sleeping facilities, although small and sparse. Finally, on other occasions, Charley will spend the night in a motel along the road. When Charley drives straight back to Mobile, Charley will eat one meal. When he sleeps overnight (either in his cab or in a motel), he will eat two meals, a late dinner and breakfast.

During the current year, Charley incurred the following expense:

Meals incurred on nonstop trips $1,000

Meals incurred when: slept in cab $800

Slept in motel $600

Lodging $2,800

Total $5,200

ISSUE: The IRS has disallowed all of the above expenses on the grounds that they are not bona fide travel expenses but personal expenses and stated Charlie owes taxes on the entire $5,200. Assume Charlie appropriately prepared a Form Schedule C with his personal tax return and included these expenses as part of his business. Prepare a response to the IRS indicating the amount of expenses deductible. In your letter indicate the amount of taxes owed, assume Charlie is in the highest tax bracket. The letter should be at least 400 words in length.

Onsider the following subscription behavior information from genie, a web site that provides tools for constructing a family tree (ancestor search). subscriptions cost $9.99 per month, but you are charged for the entire year at the time of purchase. there is a one-year minimum term when you sign up for the service. once purchased, subscriptions are set to renew automatically unless the subscriber cancels them. when a membership renews, it renews for a one-year term and again you are charged for the entire year. there are no variable costs associated with providing this service to an individual customer, but genie does engage in customer relationship activities that they believe will increase customer retention. these customer relationship activities cost genie about $10 per year per customer. based on a sample of 1000 customers that joined genie five years ago, near the time when the company was founded, they were able to determine how many of those customers remained subscribers in the second year, third year etc. based on this information, genie calculated the average annual retention rate to be 20%. genie uses an annual discount rate of 8%. a. last year, genie spent $10,000 placing advertisements on google. genie management believes that these advertisements were responsible for about 300 new subscribers. would you recommend to genie management that they purchase more google ads? b. suppose a newly-introduced loyalty program increases the number of customers that remained to 30%. does this new data change your answer to 9.a? c. do you have any hesitations or concerns about making recommendations to management based on your above estimate of customer lifetime value?