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

Organizational expenses are those that are necessary to create a new entity or to investigate the possibility of creating a new entity. Since Green Corporation began business on June 1, only expenses incurred after that date can be considered organizational expenses.

Of the expenses listed, only legal fees and state incorporation fees are considered organizational expenses. The total amount of these expenses is $5,028.

Therefore, the deduction for organizational expenses if Green chooses to deduct its costs as soon as possible is $5,028 (Choice B).

Green Corporation Is Incorporated on March 1 and Begins Business