Nicole organized a new corporation. The corporation began business on April 1 of

Question

Nicole organized a new corporation. The corporation began business on April 1 of year 1. She made the following expenditures associated with getting the corporation started:

Expenses Date Amount
Attorney fees for articles of incorp. Feb 10 $38,000
March 1-March 30 wages March 30 $3,800
March 1-March 30 rent March 30 $1,900
Stock issuance cost April 1 $21,000
April 1-May 30 wages May 30 $9,500

A. What is the total amount of the start-up costs and organizational expenditures for Nicole's corporation?
Total amount of the start-up cost $
Organizational expenditures $

B. What amount of the start-up costs and organizational expenditures may the corporation immediately expense in year 1?
Total amount of the start-up cost $
Organizational expenditures $

C. What amount can the corporation deduct as amortization expense for the organizational expenditures and for the start-up costs for year 1 (not including the amount it immediately expensed)?
Start-up costs amortized $
Organizational expenditures amortized$

D. What would be the allowable organizational expenditures, including immediate expensing and amortization, if Ingrid started a sole proprietorship instead?
Allowable organizational expenditure?

Explanation / Answer

A)Total amount of the start-up costs $22900 Organizational expenditures $12800 B)Total amount of the start-up costs $21158.333 Organizational expenditures $ 791.666 C)Total amount of the start-up costs $1900 Organizational expenditures $ 9500 D)Allowable organizational expenditure $ 24800

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