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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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