ABC Corporation is the object of a hostile takeover bid by XYZ Corporation. ABC incurs a total of $400,000 in attorneys’ fees, accounting fees, and printing costs for information mailed to ABC shareholders in its effort to defeat the XYZ takeover bid. XYZ finally concedes, and ABC remains a separate corporation.

What is the appropriate tax treatment of the $400,000 in fees? Would that treatment be different if XYZ succeeds in acquiring ABC? Tax authorities you should consult include the following:

Kinc. has provided the following data for the month of may: inventories: beginning ending work in process $ 17,000 $ 12,000 finished goods $ 46,000 $ 50,000 additional information: direct materials $ 57,000 direct labor cost $ 87,000 manufacturing overhead cost incurred $ 63,000 manufacturing overhead cost applied to work in process $ 61,000 any underapplied or overapplied manufacturing overhead is closed out to cost of goods sold. the adjusted cost of goods sold that appears on the income statement for may is: