In Year 1, Martha began a new business, New Agency Inc., a calendar-year corporation that provides adventure travel team-building and performance improvement programs for business professionals. Martha incurred several costs in Year 1 to form and organize her business as a corporation.

Martha also incurred other costs associated with starting the business before the corporation began doing business on June 1, Year 1. Martha has provided documentation for these costs in the linked exhibits below. All costs were paid by the end of the month in which the bill was received.

Using the information provided in the exhibits, calculate the amount that New Agency Inc. can deduct in Year 1 and Year 2 for organizational costs and start-up costs in the provided template. Show work as necessary.

	Year 1 Deduction	Year 2 Deduction
Organizational costs
Start-up costs
Total

Amy Smith (Organizational Costs) February Year 1

Create chart of accts & journal systems 10 hrs. $300/hr. $3000

Install gen ledger, billing system 20 hrs. $450/hr. $9000

Install management system & financial reporting 12hrs $325/hr. $3900

total $15,900

BIG 5 Mkt (new agency) start-up costs March 5 Year 1

Mkt plan                                              $4000

Social media adv. campaign            $3000

Print adv.                                            $5000

Website design                                  $2000

Promotional materials                     $4000

TOTAL                                               $18,000

Prospective Client Calls April Year 1 Start-up costs

Flights                 $2000

Hotels                 $4100

Limo Service      $400

Jackson Law (Organizational Costs) Year 1

Corp Charter                     $3800

Corp bylaws                       $5000

Articles of incorporation $4000

Stock certificates              $2000

State filing fee                   $800

TOTAL                                $15,600

ABC Training (10 people x $2600) = $26,000

Start-up Costs Year 1