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?
A) $593.
B) $460.
C) $5,427.
D) $5,627.
E) None of these.

Question

Quizplus · Accepted Answer

The § 248 election allows a corporation to amortize organizational expenditures over a period of not less than 60 months. The amount of organizational expenditures that can be amortized is limited to $5,000. In this case, Opal's organizational expenditures total $23,800. However, only $5,000 of these expenditures can be amortized. The remaining $18,800 is not deductible. The amount of the deduction for organizational expenditures for 2019 is $5,000 / 60 months * 6 months = $500.

Opal Corporation, an Accrual Method, Calendar Year C Corporation, Was