| Date |
Expenditure |
Amount |
| January 30 |
Travel to investigate potential business site |
$1,000 |
| May 15 |
Legal expenses to draft corporate charter |
2,500 |
| May 30 |
Commissions to stockbroker for issuing and selling stock |
4,000 |
| May 30 |
Temporary directors' fees |
3,100 |
| June 1 |
Expense of transferring building to Aurora |
1,500 |
| June 5 |
Accounting fees to set up corporate books |
3,000 |
| June 10 |
Training expenses for employees |
6,500 |
| June 15 |
Rent expense for June |
3,620 |
| July 15 |
Rent expense for July |
3,620
|
Aurora Corporation incorporates on January 7, begins business on July 10, and elects to have its initial tax year end on NovemberNovember 3030. AuroraAurora incurs the following expenses between January and NovemberNovember related to its organization during the current year:
Requirement
| a. |
What alternative treatments are available for AuroraAurora's expenditures? |
| b. |
What amount of organizational expenditures can AuroraAurora Corporation deduct on its first tax return for the fiscal year ending NovemberNovember 3030? |
| c. |
What amount of start-up costs can AuroraAuroraCorporation deduct on its first tax return?
|
Corporation reports the following results for the current year:
| Gross profits on sales |
$200,000 |
| Dividends from less-than-20%-owned domestic corporations |
160,000 |
| Operating expenses |
198,000
|
| a. |
What is DermaDerma's taxable income for the current year, assuming qualified production activities income is $1,000? |
| b. |
How would your answer to Part a change if DermaDerma's operating expenses are instead $208,000, assuming qualified production activities income is zero ornegative? |
| c. |
How would your answer to Part a change if DermaDerma's operating expenses are instead $287,000, assuming qualified production activities income is zero ornegative? |
| d. |
How would your answers to Parts a, b, and c change if DermaDermareceived $120,000of the dividends from a 20%-owned corporation and the remaining $40,000from a less-than-20%-owned corporation?
|
Corporation reports the following results for the current year:
| Gross income from operations |
$270,000 |
| Dividends from less-than-20%-owned domestic corporations |
105,000 |
| Operating expenses |
145,000 |
| Charitable contributions |
21,000
|
In addition, DeltaDelta has a $51,000 NOL carryover from the preceding tax year, and its qualified production activities income is $125,000.a. What is Delta'sDelta'staxable income for the current year?
What carrybacks or carryovers are available to other tax years?