Alabaster Corporation, a calendar year taxpayer, was formed on July 1, 2017, and incurred organizational expenditures of $52,000. Its deduction for these expenditures for 2017 can be a:

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Organizational expenditures are incurred in creating a corporation, partnership, or LLC. Taxpayers can currently deduct up to $5,000 of these expenses in the year the business begins operations, with the remaining expenses amortized over 180 months, beginning in the month the business starts.

In this case, Alabaster Corporation was formed on July 1, 2017, which means it had been in existence for only six months in the 2017 tax year. Therefore, the maximum deduction for organizational expenses would be $3,000 ($5,000 × 6/12) plus a portion of the remaining expenses that would be amortized over 180 months.

The portion that would be amortized over 180 months would be $49,000 ($52,000 – $3,000) divided by 180, which equals $272.22 per month. Since Alabaster Corporation was in existence for only six months in 2017, the total amount that could be deducted for organizational expenses would be $4,632 ($3,000 + (6 × $272.22)).

Choice C is the only option that reflects this calculation. The other options either do not take into account the six-month period or use incorrect formulas for calculating the deduction.

Alabaster Corporation, a Calendar Year Taxpayer, Was Formed on July