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: What is the deduction for organizational expenses if Green chooses to deduct its costs as soon as possible?

Question

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:  What is the deduction for organizational expenses if Green chooses to deduct its costs as soon as possible?

Quizplus · Accepted Answer

Since Green Corporation is incorporated on March 1 and begins business on June 1, it has a short tax year that ends on October 31. The maximum amount of organizational expenses that can be deducted in the short year is $5,000. Therefore, the deduction for organizational expenses if Green chooses to deduct its costs as soon as possible should be $5,028. Option A is incorrect since the maximum amount that can be deducted is $5,000. Option C and D are also incorrect since they do not reflect the actual amount of organizational expenses incurred by Green Corporation.

Green Corporation Is Incorporated on March 1 and Begins Business