Saguaro Corporation,a Cash Basis and Calendar Year Taxpayer,was Formed and Began

question 19

Multiple Choice

Saguaro Corporation,a cash basis and calendar year taxpayer,was formed and began operations on August 1,2008.Saguaro incurred the following expenses during its first year of operations (August 1-December 31,2008) :
If Saguaro Corporation makes a timely election under § 248 to amortize qualifying organizational expenses,how much may the corporation deduct for tax year 2008?

• A)$4,078.
• B)$5,000.
• C)$6,314.
• D)$6,458.
• E)None of the above.

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Definitions:

Period Costs

Expenses that are not directly tied to production and are accounted for in the period in which they are incurred, such as selling and administrative expenses.

September

The month that appears as the ninth in the sequence of months in the Gregorian calendar.

Fixed Manufacturing Cost

A type of overhead cost that does not change with the level of production, such as rent, salaries, and insurance.

Units Produced

Units produced refers to the total number of completed units of a product that a company has manufactured within a specific period.