R3 M1 - C Corporation Overview Flashcards
Which of the following cannot be amortized for tax purposes?
A. Incorporation costs. B. Temporary directors' fees. C. Stock issuance costs. D. Organizational meeting costs.
Choice “C” is correct. All costs of issuing stock are not eligible to be deducted or amortized as an organizational expenditure or start-up cost.
Choice “A” is incorrect. All incorporation costs are eligible to be deducted or amortized as an organizational expenditure.
Choice “B” is incorrect. All temporary director fees are eligible to be deducted or amortized as a start-up cost.
Choice “D” is incorrect. All organizational meeting costs are eligible to be deducted or amortized as an organizational expenditure.
Choice “B” is correct. Tapper’s college matching contributions are deductible; Tapper made the contributions; the employees merely directed the proceeds. The Board’s authorized contribution is also deductible since it satisfies the two rules under which an accrual-basis corporation can deduct an accrued contribution: 1) it was authorized to a qualified charity by Board resolution before the end of the taxable year and 2) it was paid by the 15th day of the 4th month after the end of the taxable year of accrual.
Choice “A” is incorrect. This answer is only the amount authorized by the board, but the matching contribution is also deductible in Year 1.
Choice “C” is incorrect. This answer is only the matching contribution, but the contribution authorized by the board by the end of Year 1 and paid by the 15th day of the fourth month of Year 2 is also deductible in Year 1.
Choice “D” is incorrect. Both of these contributions are deductible in Year 1.
