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

Since the corporation began business on June 1, the expenses incurred before that date cannot be deducted as organizational expenses. Therefore, the total organizational expenses are $5,028 ($2,528 + $2,500). The best choice would be to deduct these expenses as soon as possible to provide a tax benefit in the short year.

Green Corporation Is Incorporated on March 1 and Begins Business