Taxes: Special Corporate Deductions

Question 1

Taxes:
Special Corporate Deductions
Organizational, Start-Up, and Syndication

Answer 1

Organizational, Start-Up, and Syndication

• $5,000 may be deducted
• reduced by amount exceeds $50k
• expenses not deducted are capitalized then amortized over 180 months
• syndication: costs of issuing and selling stock, must be capitalized (not amortized)

Question 2

Taxes:
Special Corporate Deductions
Charitable Contributions

Answer 2

Charitable Contributions
Same as for individuals except:
- contribution of inventory, depreciables, or real property used for care of sick people
- AB of property + (50%x(FMV-AB)) OR 2xAB
- can deduct if contributions are actually paid in first 2.5 months of year-end
- limit 10% TI
-excess carries forward 5 years

Question 3

Taxes:
Special Corporate Deductions
Dividends Received Deduction

Answer 3

Dividends Received Deduction
- stock held over 45 days (90 preferred)
- not for S Corp, personal service corp, or personal holding companies
own less than 20% = 70% deduction
own 80%+ = 100% deduction
- limited by TI except if creates or adds to NOL

Question 4

Taxes:
Special Corporate Deductions
Domestic Production Deduction

Answer 4

Domestic Production Deduction
- 9% times lower of:
- qualified production activity income or
- taxable income
- may not exceed 50% of wages allocable
Qualified Production Activity Income
- equals gross recipets from domestic production - COGS - direct expenses - pro rata share of indirect expenses