Question

Opal Corporation, an accrual method, calendar year C corporation, was formed and began operations on July 1, 2019. The following expenses were incurred during the first tax year (July 1 through December 31, 2019) of operations.
Expenses of temporary directors and of organizational meetings $8,000
Fee paid to the state of incorporation 2,000
Accounting services incident to organization 3,500
Legal services for drafting the corporate charter and bylaws 4,300
Expenses incident to the printing and sale of stock certificates 6,000

Assuming a § 248 election, what is Opal’s deduction for organizational expenditures for 2019?

Answer 1

Answer:

The correct answer to the following question will be "$5427".

Explanation:

The given expenditures are:

Temporary director's as well as organisational meetings expenditures = $8000

Fee payable to either the incorporation province  = $2000

Incident accountants for organisation  = $3500

Legal resources and by-laws for writing the company charter = $4300

So that total qualifying expenses will be :

⇒  $17,800

Now,

Deduction regarding section 248 election:

Immediate expensing = $5000

Amortization = $\frac{(total \ qualifying \ expenses-immediating \ expensing )}{180\times 6}$

On putting the values in the above formula, we get

⇒                   = $\frac{(17800-5000)}{180\times 6}$

⇒                   = $$427$

Hence the deduction on election regarding section 248 = $5,427