Teal Corporation is incorporated in November 2014.The following formation expenses are incurred in 2014: Legal and accounting expenses incident to organization $4,000
Expenses of temporary directors and organizational meetings 2,000
Of directors and shareholders
Expenditures connected with the transfer of assets to Teal 3,000
Except for the legal and accounting expenses which are paid in 2015,all other expenses are paid in 2014.If Teal Corporation uses the cash basis and adopts a calendar year for tax purposes,the amount of organizational expenditures it can elect to expense for 2014 is:

Question

Quizplus · Accepted Answer

$5,011,which is the limit on immediate expensing,plus $11 (180-month amortization of $1,000 balance for two months).The cost of $3,000 dealing with the transfer of assets does not qualify for amortization.Regardless of the corporation's method of accounting,it is the year incurred (not paid)that controls for organizational expenditures.

Teal Corporation Is Incorporated in November 2014