Black Corporation, an accrual basis taxpayer, was formed and began operations on February 1, 2011. During its first year of operations (February 1 - December 31, 2011), Black incurred the following expenses: fee paid to state of incorporation of $2,000, accounting and legal services incident to organization of $9,000, and expenses related to the printing and sale of stock certificates of $10,000. Black has $11,000 of qualified organizational expenditures that it may elect to amortize.

Question

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Black Corporation incurred $21,000 of organizational expenses during its first year of operations, which includes the $11,000 of qualified organizational expenditures that it may elect to amortize. As an accrual basis taxpayer, these expenses can be deducted or amortized over a period of 180 months, starting with the month in which the corporation begins business. Black can elect to amortize the $11,000 over this period, and can deduct the remaining $10,000 of expenses in the year incurred.

Black Corporation, an Accrual Basis Taxpayer, Was Formed and Began