Question

Ficus, Inc. began business on March 1, 2018, and elected to file its income tax return on a calendar-year basis. The corporation incurred $800 in organizational expenditures. Assuming the corporation does not elect to expense but chooses to amortize the costs over 180 months, the maximum allowable deduction for amortization of organizational expenditures in 2018 is:
a. $4.44b. $53.28c. $44.44d. $800.00e. None of these choices are correct.

Answer 1

Answer:

c. $44.44

Explanation:

For computing the maximum allowable deduction for amortization of organizational expenditures, first, we have to determine the per month deduction which is shown below:

= Organization expenditure incurred ÷ number of months

= $800 ÷ 180 months

= $4.44

Now for 10 months, it would be

= $4.44 × 10 months

= $44.44

The 10 months is calculated from March 1 to December 31. As we assume the books are closed on December 31