Question

Cherry Corporation, a calendar year C corporation, is formed and begins business on 8/1/2019. In connection...

Cherry Corporation, a calendar year C corporation, is formed and begins business on 8/1/2019. In connection with its formation, Cherry incurs organizational expenditures of $51,200.

Round the per month amount to two decimal places. Round your final answer to the nearest dollar.

Determine Cherry Corporation's deduction for organizational expenditures for 2019. $ 2,394

0 0
Add a comment Improve this question Transcribed image text
Answer #1

Solution:

Cherry Corporation's deduction for organizational expenditures for 2019 = $ 5,117

Immediate Expense ($5000 - ($ 51,200 - $ 50,000)) $ 3,800.00
Amortization +{($ 51,200 - $ 3,800) / 180 Months } * 5 Months in tax year 2019 $ 1,316.67
Total Deduction for 2019 $        5,117.00

Notes:

1) Deduction of organisational expenditure for the year 2019 is allowed to the lesser of following:

a) Actual Expense incurred

b) $ 5,000, after reducing that amount in excess of $50,000. remaining amount will be amortized for 180 months starting from the month in which business has started.

c) In 2019, there are 5 more months available till ending month. So, amortize for 5 months in current year.

Add a comment
Know the answer?
Add Answer to:
Cherry Corporation, a calendar year C corporation, is formed and begins business on 8/1/2019. In connection...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions
ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT