In return for legal services worth $60,000 rendered incident to its formation, Crimson Corporation issues stock to Greta, an attorney. Crimson cannot immediately deduct the value of any of this stock but instead must capitalize it as an organizational expenditure.

Question

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The cost of legal services rendered in exchange for stock during the formation of a corporation is considered an organizational expense. These costs must be capitalized rather than deducted immediately.

In Return for Legal Services Worth $60,000 Rendered Incident to Its