Powell Inc

question 22

Multiple Choice

Powell Inc. was incorporated and began operations on October 1 and adopted a calendar year for tax purposes. Powell paid $4,200 to the attorney who handled the corporate formation. Which of the following statements is true?

• A) If Powell capitalized the $4,200 payment for financial statement purposes, it must also capitalize it for tax purposes.
• B) Powell can deduct the $4,200 payment on its first tax return.
• C) For tax purposes, Powell must capitalize the $4,200 organizational cost and amortize it over 15 years.
• D) None of these choices are true.

---

Definitions:

PCP

Synthesized drug now used as an animal tranquilizer that can cause stimulant, depressant, narcotic, or hallucinogenic effects.

Hidden Observer

A concept in hypnotism referring to a part of the mind that remains aware and observant during hypnosis, despite any suggestions of not being conscious of ongoing activities.

Ernest Hilgard

An influential psychologist known for his research on hypnosis and the theory of the "hidden observer" which suggests a part of the mind is always aware and observing what happens, even during hypnosis.

Tetrahydrocannabinol

The main psychoactive component of cannabis, responsible for the plant's intoxicating effects.