Emerald Corporation,a calendar year C corporation,was formed and began operations on July 1,2011.The following expenses were incurred during the first tax year (July 1 through December 31,2011)of operations: Assuming a § 248 election,what is the Emerald's deduction for organizational expenditures for 2011?

Question

Emerald Corporation,a calendar year C corporation,was formed and began operations on July 1,2011.The following expenses were incurred during the first tax year (July 1 through December 31,2011)of operations:  Assuming a § 248 election,what is the Emerald's deduction for organizational expenditures for 2011?

Quizplus · Accepted Answer

Under § 248, the maximum deduction for organizational expenditures incurred during the first tax year of operations is $5,000, reduced by the amount by which organizational expenditures exceed $50,000. In this case, Emerald Corporation incurred $15,000 of organizational expenditures in 2011, so the deduction is reduced by ($15,000 - $50,000) = $0. Therefore, the deduction for organizational expenditures for 2011 is $5,000 - $0 = $5,000.

Emerald Corporation,a Calendar Year C Corporation,was Formed and Began Operations