Since the amount of legal services had increase to 28000 which increase the

# Since the amount of legal services had increase to

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> Since, the amount of legal services had increase to \$28,000 which increase the organizational expenditures, the total became \$52,000 which exceed the organizational expenditures resulting to first year expensing limit to only \$3,000 [\$5,000-(52,000-50,000)]. So, the total deduction for organizational expenditures would be \$4,633.Expenses of Temporary Directors and Organizational Meetings \$21,000Fee Paid to State of Incorporation3,000Legal Services for Drafting the Corporate Charter and Bylaws28,000Total Organization Expenditures\$52,000Less: Immediate Expenses(3,000)Total Deduction for Organizational Expenditures\$3,544
[\$3,000 + (\$52,000 - \$3,000) / 180 months x 2 months]45. Egret Corporation, a calendar year Ccorporation, was formed on March 6, 2018, andopened for business on July 1, 2018. After itsformation but prior to opening for business, Egretincurred the following expenditures: a)What’s max amount of these expenditures Egretcan deduct in 2018? \$7,000 + \$14,500 + \$11,000 + \$8,000 + \$1,000 = \$41,500 Total Expense> If Egret elects to make \$195 election, then Egret can deduct \$5,000 immediately and can amortize remaining expense in 180 months installment beginning with period in which business startsDeduction = [\$5,000 + (\$41,500 - \$5,000) * 6/180] > = \$6,217 47. The following info for 2018 relates to Sparrow Corporation, a calendar year,accrual method taxpayer.Net income per books (after-tax)\$205,050Federal income tax expense per books55,650Tax-exempt interest income4,500MACRS depreciation in excess of straight-line depreciation used for financial statement purposes7,200Excess of capital loss over capital gains9,400Nondeductible meals and entertainment5,500Interest on loan to purchase tax-exempt bonds1,100Based on the above information, use Schedule M–1 of Form 1120, which is available on the IRS website, to determine Sparrow’s taxable income for 2018.Net income per books (after-tax)\$205,050Add: Items that decrease net books, but have no effect on taxable incomeFederal Income Tax55,650Excess Charitable Contributions9,400Interest Paid on Loan1,100Premiums Paid on Policy5,500\$71,650\$276,700Less: Items that increased net income, but no effect on taxable incomeTax-Exempt Interest Income4,500Excess of MARCS over Book Depreciation7,200(11,700)Taxable Income\$265,000Accounting \$7,000Advertising14,500Employee Payroll11,000Rent8,000Utilities1,000

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• Spring '16
• Accounting, Taxation in the United States