Coral Corporation, an Accrual Basis Taxpayer, Was Formed and Began

question 6

Multiple Choice

Coral Corporation, an accrual basis taxpayer, was formed and began operations on October 1, 2009.The following expenses were incurred during the first tax year (October 1 to December 31, 2009) of operations: $\begin{array}{lr}\text { Expenses of temporary directors and of organizational meetings } & \$ 20,000 \\\text { Fee paid to the state of incorporation } & 1,600 \\\text { Accounting services incident to organization } & 6,800 \\\text { Legal services for drafting the corporate charter and bylaws } & 2,000 \\\text { Expenses incident to the printing and sale of stock certificates } & 4,000\\&\$34,400\end{array}$ Assume Coral Corporation makes an appropriate and timely election under § 248(c) and the related Regulations.What is the maximum organizational expense Coral may write off for tax year 2009?

• A)$507.
• B)$5,000.
• C)$5,423.
• D)$5,490.
• E)None of the above.

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Definitions:

Market Risk

The likelihood that investors might face losses because of issues impacting the general functioning of the financial markets.

Standard Deviation

A statistical measure of the dispersion or spread of a set of data points in relation to their mean, used to gauge volatility.

Correlated

Refers to the relationship between two variables where a change in one can be associated with a change in the other.

Market

A place or system where buyers and sellers interact to trade goods, services, or securities.