Question

Special Deductions and Limitations (LO 11.3) Beech Corporation, an accrual basis calendar year taxpayer, was organized and began business on July 1st of the current calendar tax year. During the current year, the corporation incurred the following expenses: State fees for incorporation $ 500 Legal and accounting fees incident to organization 4,150 Expenses for the sale of stock 2,100 Organizational meeting expenses 750 Assuming that Beech Corporation does not elect to expense but chooses to amortize organizational expenditures over 15 years, calculate the corporation's deduction for its current calendar year$_______________

Answer 1

The deduction for Beech Corporation's current calendar year can be calculated by amortizing the organizational expenditures over 15 years. The deduction for the current year would be $500.

Step-by-step explanation:

The deduction for Beech Corporation's current calendar year can be calculated by amortizing the organizational expenditures over 15 years.

To find the deduction, you need to calculate the total organizational expenditures.

In this case, the expenses are $500 (state fees for incorporation), $4,150 (legal and accounting fees incident to organization), $2,100 (expenses for the sale of stock), and $750 (organizational meeting expenses).

Adding these expenses gives a total of $7,500.

Since Beech Corporation chooses to amortize these expenditures over 15 years, the deduction for the current year would be $7,500 divided by 15, which is $500.