Question
Reed Inc. was incorporated on July 1, but did not start business until October 1, It adopted a fiscal year end of February 28. In
Reed Inc. was incorporated on July 1, but
did not start business until October 1, It
adopted a fiscal year end of February 28. In
connection with organizing the business,
Reed Inc. incurred the following expenses:
Legal fees for incorporating $8,000
Accounting fees for opening corporate books 1,000
Tax planning advice1,500
Printing and issuing stock certificates50
Incorporation fee to state200
Temporary directors' fees2,000
Legal fees for the transfer of assets to500
the corporation
$11,350
a. What is the amount of the organizational
expenditures?
b. Flow much of the amount is deductible
in the corporation's first taxable year?
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