Unformatted text preview: on is required to use the direct charge-off method rather than the reserve method.
Choice "d" is correct. Corporations that are not small banks or thrift institutions are required to use the
direct charge-off method rather than the reserve method.
Choices "a", "b", and "c" are incorrect, per the above rule. CPA-02241 Type1 M/C 119. CPA-02241 A-D Nov 91 II #48 Corr Ans: C PM#25 R 3-99 Page 17 The costs of organizing a corporation:
a. May be deducted in full in the year in which these costs are incurred even if paid in later years.
b. May be deducted only in the year in which these costs are paid.
c. May be amortized over a period of not less than 180 months even if these costs are capitalized on the
d. Are nondeductible capital expenditures.
Choice "c" is correct. Organization costs of a corporation may be amortized over a period of not less than
180 months. An initial $5,000 may be deductible in year 1, subject to certain limita...
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- Fall '10
- The Land, Taxation in the United States, Educational Development Corp, Type1 M/C, Corr Ans