Gull Corporation, a cash method, calendar year C corporation, was formed and began business on November 1,

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Gull Corporation, a cash method, calendar year C corporation, was formed and began business on November 1, 2019. Gull incurred the following expenses during its first year of operations (November 1, 2019–December 31, 2019):

Expenses of temporary directors and organizational meetings.................$21,000
Fee paid to state of incorporation.......................................................................3,000
Expenses for printing and sale of stock certificates........................................11,000
Legal services for drafting the corporate charter and bylaws
(not paid until January 2020)..............................................................................19,000

a. Assuming that Gull Corporation elects under § 248 to expense and amortize organizational expenditures, what amount may be deducted in 2019?

b. Assume the same facts as above, except that the amount paid for the legal services was $28,000 (instead of $19,000). What amount may be deducted as organizational expenditures in 2019?

Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
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South-Western Federal Taxation 2020 Comprehensive

ISBN: 9780357109144

43rd Edition

Authors: David M. Maloney, William A. Raabe, James C. Young, Annette Nellen, William H. Hoffman

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