a calendar year c corporation made a nonliquidating

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Unformatted text preview: 00 $7,400 CPA-02248 Explanation Choice "d" is correct. $7,400 is the maximum amount of organization costs that Haze may deduct in 2004. Rule: Organization costs are costs of forming a new corporation (e.g., legal and filing fees). The first $5,000 of such costs is immediately deductible as long as the expenditures do not exceed $50,000. Any amounts after the applicable immediate deduction are amortized over 180 months. Rule: The costs associated with the sale and issuance of the corporation's own stock (e.g., underwriting fees) are not organizational costs. These types of costs must be capitalized. Legal fees to draft corporate charter $ 41,000 (5,000) $ 36,000 /180 200 ×12 $ 2,400 + 5,000 = $7,400 Immediate deduction Divided by 180 months Monthly amortization Choices "a", "b", and "c" are incorrect, per the above rules. CPA-02252 Type1 M/C 124. CPA-02252 A-D R98 #11 Corr Ans: A PM#30 R 3-99 Page 6 Pierce Corp., an accrual-basis, calendar-year C corporation, had the following 1997 receipts: 1998 advance rental payments for a lease ending in 1999 Lease cancellation payment from a five-year lease tenant $250,000 100,000 Pierce had no restrictions on the use of the advance rental payments and renders no service...
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This note was uploaded on 06/14/2013 for the course ACCOUNTING Regulation taught by Professor Becker during the Fall '10 term at Keller Graduate School of Management.

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