5. LO.3 Candlewood LLC began its business on September 1; it uses a calendar tax and an accounting year. Candlewood incurred $6,500 in legal fees for drafting the LLC’s operating agreement and $3,000 in accounting fees for tax advice of an organizational nature, for a total of $9,500 of organizational costs.

Candlewood also incurred $30,000 of preopening advertising expenses and

$24,500 of salaries and training costs for new employees before opening for business, for a total of $54,500 of startup costs. The LLC desires to take the largest deduction available for these costs. Compute Candlewood’s deductions for the first year of its operations for:

a. Organizational expenditures.

b. Startup expenses.