What is the deduction for organizational expenses if Green chooses to deduct its costs as soon as possible?
Green Corporation is incorporated on March 1 and begins business on June 1. Green's first tax year ends on October 31, i.e., a short year. Green incurs the following expenses during the year:
A) $36,000
B) $5,028
C) $667
D) $500
B) $5,028
Amortization of organizational expenses does not include the stock commission, which reduces paid-in capital, and the charter modification, which is incurred after the initial year-end
$2,000 + $2,000 + $2,000 = $6,000 - $5,000 = $1,000/180 mo. × 5 mo. = $28
$5,000 + 28 = $5,028
.
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