Warbler Corporation, an Accrual Method Regular Corporation, Was Formed and Began

question 48

Essay

Warbler Corporation, an accrual method regular corporation, was formed and began operations on March 1, 2014. The following expenses were incurred during its first year of operations (March 1 - December 31, 2014):
Expenses of temporary directors and organizational meetings $25,000 Incorporation fee paid to state 2,000
Expenses incurred in printing and selling stock certificates 10,000
Accounting services incident to organization 12,000
a. Assuming a valid election under § 248 to amortize organizational expenditures, what is the amount of Warbler's deduction for 2014?
b. Same as a., except that Warbler also incurred in 2014 legal fees of $15,000 for the drafting of the corporate charter and bylaws. What is the amount of Warbler's 2014 deduction for organizational expenditures?

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Definitions:

Compounded Monthly

Interest calculation method where the accumulated interest is added to the principal amount every month, allowing the interest in the next month to be calculated on the increased total.

Interest

Interest is the charge for borrowing money, typically expressed as a percentage of the principal amount per year.

Deposits

Funds placed into an account in a bank or other financial institution for safekeeping.

Compounded Quarterly

Interest on an investment or loan calculated four times per year, adding each quarter's interest to the principal for the calculation of the next quarter's interest.