Hornbill Corporation, a cash basis and calendar year C corporation, was formed and began operations on May 1, 2014. Hornbill incurred the following expenses during its first year of operations (May 1 - December 31, 2014): temporary directors meeting expenses of $10,500, state of incorporation fee of $5,000, stock certificate printing expenses of $1,200, and legal fees for drafting corporate charter and bylaws of $7,500. Hornbill Corporation's current year deduction for organizational expenditures is $5,800.

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The total organizational expenses incurred by Hornbill Corporation during its first year of operations are $24,200 ($10,500 + $5,000 + $1,200 + $7,500). However, only $5,800 of these expenses are deductible as organizational expenditures in the current year. The remaining $18,400 must be capitalized and amortized over a period of 180 months (15 years) beginning with the month that Hornbill Corporation began business.

Hornbill Corporation, a Cash Basis and Calendar Year C Corporation