Firethorn Corporation began business on May 1,2011,and elected to file its income tax return on a calendar-year basis.The corporation incurred $3,000 in organizational expenditures.Assuming the corporation elects to amortize the costs over 180 months,the maximum allowable deduction for amortization of organizational expenditures in 2011 is:

Question

Quizplus · Accepted Answer

The maximum allowable deduction for amortization of organizational expenditures in 2011 is calculated using the half-year convention, as the corporation began business in May. Therefore, the deduction is 1/180 of $3,000 multiplied by 8 (the number of months remaining in the year after May). This results in a deduction of $133.33, rounded to $133.

Firethorn Corporation Began Business on May 1,2011,and Elected to File