Drab Corporation,a calendar year and cash basis taxpayer,is formed in December 2016.In the same month,expenses are incurred as follows:
Attorney fees for drafting the charter and by-laws
$14,000
Expenses for issuing and selling stock
16,000
CPA fees for establishing accounting system
7,000
Fees for transfer of assets to the corporation
10,000
Expenses of organizational meetings of temporary directors and shareholders
3,000
Incorporation fee paid to the state
2,000

a.
How much qualifies as organizational expenditures that can be deducted or amortized over a period of 180 months or more?
b.Would it matter if some of these expenses were not paid until 2017?

Question

Drab Corporation,a calendar year and cash basis taxpayer,is formed in December 2016.In the same month,expenses are incurred as follows:
Attorney fees for drafting the charter and by-laws
$14,000
Expenses for issuing and selling stock
16,000
CPA fees for establishing accounting system
7,000
Fees for transfer of assets to the corporation
10,000
Expenses of organizational meetings of temporary directors and shareholders
3,000
Incorporation fee paid to the state
2,000
​
a.
How much qualifies as organizational expenditures that can be deducted or amortized over a period of 180 months or more?
b.Would it matter if some of these expenses were not paid until 2017?

Quizplus · Accepted Answer

The Answer of Drab Corporation,a calendar year and cash basis taxpayer,is formed in December 2016.In the same month,expenses are incurred as follows:
Attorney fees for drafting the charter and by-laws
$14,000
Expenses for issuing and selling stock
16,000
CPA fees for establishing accounting system
7,000
Fees for transfer of assets to the corporation
10,000
Expenses of organizational meetings of temporary directors and shareholders
3,000
Incorporation fee paid to the state
2,000
​
a.
How much qualifies as organizational expenditures that can be deducted or amortized over a period of 180 months or more?
b.Would it matter if some of these expenses were not paid until 2017?

Drab Corporation,a Calendar Year and Cash Basis Taxpayer,is Formed in December