Salter commenced business on September 8. What is the maximum amount of organizational expenditures that can be deducted by the corporation for its first tax year ending December 31?
The following expenses are incurred by Salter Corporation when it is organized on July 1:
Attorney fees to draft charter $20,000
Underwriter fees for stock sale 10,000
Transfer cost for property contributed to the corporation for stock 4,000
Costs of organizational meetings before beginning business 5,000
Costs of directors' meetings after beginning business 8,000
($20,000 + $5,000) = $25,000 total organizational costs. Deduction is $5,000 + [6 × (20,000/180)] = $5,667.
You might also like to view...
Answer the following statements true (T) or false (F)
1. Decentralized control is most appropriate for an organization in which the tasks are explicit and certain. 2. Except for in rare instances, employees at McLaren Professional Painting take responsibility for their own work and how it is done, rather than being governed by a rigid set of rules. McLaren is using bureaucratic control. 3. The balanced scorecard, also known as the triple bottom line, gives top managers a fast but comprehensive view of the organization via three indicators. 4. Social responsibility and ethics make up one of the four indicators used in the balanced scorecard.
Knollwood Corporation issued $286,000 of 30-year, 8 percent bonds at 106 on one of its semiannual interest dates. The straight-line method of amortization is to be used. The entry to record the bond interest expense on the next interest payment date is:
A) Bond Interest Expense 11,440 Cash 11,440 B) Bond Interest Expense 11,726 Cash 11,726 C) Bond Interest Expense 10,840 Cash 10,840 D) Bond Interest Expense 11,154 Unamortized Bond Premium 286Cash 11,440
Describe the cost accumulation process in a traditional manufacturing environment versus a just-in-time (JIT) environment
Billy is the star of his school’s football team. He will not go out onto the field without his lucky sweatbands. He thinks that he cannot run as fast without them. Billy’s decision to play the game is based on which error?
a. Framing b. Uncertainty c. Randomness d. Lack of participation error