Question

Egret Corporation, a calendar year C corporation, was formed on March 6, 2019, and opened for business on July 1, 2019. After its formation but prior to opening for business, Egret incurred the following expenditures:Accounting $7,000Advertising 14,500Employee payroll 11,000Rent 8,000Utilities 1,000What is the maximum amount of these expenditures that Egret can deduct in 2019?

Answer 1

$6,217

Step-by-step explanation:

Total expenditure incurred = $7,000 + $14,500 + $11,000 + $8,000 + $1,000

= $41,500

If Egret Selects to make, sec 195 election, then he can deduct $5,000 initially and the remaining in equal 180 installments.

her, in the given instance total months in current year = 1 July to 31 December = 6 months.

Therefore, deduction shall be

$5,000 +
`(41,500-5,000)/(180) * 6 = $5,000 + 1,217` = 6,217