Nicole organized a new corporation. The corporation began business on April 1 of year 1. She made the following expenditures associated with getting t
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:
\r\nExpense Date Amount
\r\nAttorney fees for articles of incorporation February 10 $32,000
\r\nMarch 1 – March 30 wages March 30 $4,500
\r\nMarch 1 – March 30 rent March 30 $2,000
\r\nStock issuance costs April 1 $20,000
\r\nApril 1 – May 30 wages May 30 $12,000
\r\na. What is the total amount of the start-up costs and organizational expenditures for Nicole’s corporation?
\r\nb. What amount of the start-up costs and organizational expenditures may the corporation immediately expense in year 1 (excluding the portion of the expenditures that are amortized over 180 months)?
\r\nc. 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 determined in part (b)]?
\r\nd. What would be the total allowable organizational expenditures if Nicole started a sole proprietorship instead of a corporation?
\r\n