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So as I’m in my final review of all the material I am just making sure that I dont take anything for granted. Whenever I come across a question regarding org exp and start up cost, the question mainly consist of just calculating the amount that can be amortized in a tax year. Not once have I seen a Becker problem that is challenging the 50k threshold which with my luck the examiners can make a whole simulation out of it. So with that being said, what does the 50k threshold really mean. Example:

Lets hypothetically say a company has a total of 110k in organizational expenditures for the year so does that mean the 5k deduction is completely eliminated and that I divide the 110k by 15yrs/180mo and that will by my deduction for the year which is 7,333.33?

Any input will greatly appreciated. Like I said from past experience they always seem to get me stumped with topics i swear I understand that is not really emphasized in the study material. Thanks.

FAR. Feb 2014 76
REG. Jan 2015 79 half way there!!
BEC. Feb 2015 79 thank you God!!
AUD. Apr 20, 2015 and will be done. Hold that thought 65, 7/14/15 85!
Ok where was I? Oh thats right now I'm Done!!!!!!!!!
Ethics 92!!

"You down wit SEC?, yeah you know me!!!"

Cali Candidate

All Becker Materials, Wiley Test Bank, Ninja audio, Ninja MCQ, Ninja Notes

[Gabe]

NINJA MCQ has one that is over…here it is:

Brown Corp., a calendar-year taxpayer, was organized and actively began operations on July 1, 2014, and incurred the following costs during 2014:

Legal fees to obtain corporate charter $45,000

State incorporation fees 5,000

Temporary director expenses 2,000

Commission paid to underwriter 25,000

Other stock issue costs 10,000

Brown elects to deduct its organizational costs. In 2014, what is the maximum amount of organizational costs that Brown can deduct?

A.$4,633

B.$5,000

C.$5,200

D.$6,567

Ok, so let's say you have $52k of org exp…here is the calculation:

52-5= 47/180= $261 * 6 mos= $1,566

$5k+1,566 LESS $2k over 50k limit= 4,556 (ish)…so A

CPA, CFE
CISA- Experience will be completed by August 2016

[highlightnumb]

Sweet Gabe thank you. I calculated it a little different but still go to the same answer.

I first just phased out the 5k to 3k and then used the 3k as my adjusted expense and subtracted it from 52k to get 49 and then amortized the 49k over 180 months to get a deduction of 1633 plus the 3k for a total of 4,633. Thanks

52,000

-3,000

= 49,000 * 6/180= 1,633 plus 3,000 = 4,633 rounded.

FAR. Feb 2014 76
REG. Jan 2015 79 half way there!!
BEC. Feb 2015 79 thank you God!!
AUD. Apr 20, 2015 and will be done. Hold that thought 65, 7/14/15 85!
Ok where was I? Oh thats right now I'm Done!!!!!!!!!
Ethics 92!!

"You down wit SEC?, yeah you know me!!!"

Cali Candidate

All Becker Materials, Wiley Test Bank, Ninja audio, Ninja MCQ, Ninja Notes

[Author]

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