Edison Corporation is organized on July 31.The corporation starts business on August 10.The corporation adopts a November 30 fiscal year end.The following expenses are incurred during the year: What is the maximum amount of organizational expenditures that can be deducted by the corporation for its first tax year ending November 30?

Question

Edison Corporation is organized on July 31.The corporation starts business on August 10.The corporation adopts a November 30 fiscal year end.The following expenses are incurred during the year:  What is the maximum amount of organizational expenditures that can be deducted by the corporation for its first tax year ending November 30?

Quizplus · Accepted Answer

C) The underwriter fees and asset transfer cost are not organizational costs. The legal fee to modify charter is incurred after the November 30 initial year end.
$10,000 + $2,000 = $12,000 - $5,000 = $7,000
($7,000/180) × 4 = $156; $5,000 + 156 = $5,156

Edison Corporation Is Organized on July 31