Term
| Organizational Expenditures |
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Definition
| When formed, a corporation may incur some organizational expenditures such as legal fees and accounting fees incident to the incorporation process. These expenditures normally must be capitalized |
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Term
| Section 291 results in the recapture, as ordinary income, of up to ___% of the gain on sales of Sec. 1250 property. This recapture requirement reduces the amount of net Sec.1231 gains that can be offset by corporate capital losses. |
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Definition
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Term
| under Sec. 248, a corporation may elect to deduct the first $_______ of organizational expenditures |
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Definition
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Term
| Sigma incurs $52,000 of organizational expenditures. Because these expenditures exceed $_______, Sigma must reduce the first $5,000 by $2,000 ($52,000 − $50,000), leaving a $3,000 deduction. Sigma amortizes the remaining $49,000 ($52,000 − $3,000) over 180 months beginning in March of its first year. This portion of the deduction equals $1,906 ($49,000/180 × 7 months). Accordingly, its total first-year deduction is $4,906 ($3,000 + $1,906). |
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Definition
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Term
| Specific organizational expenditures include: |
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Definition
-Legal services incident to the corporation’s organization (e.g., drafting the corporate charter and bylaws, minutes of organizational meetings, and terms of original stock certificates)
-Accounting services necessary to create the corporation
-Expenses of temporary directors and of organizational meetings of directors and stockholders
Fees paid to the state of incorporation |
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Term
| Organizational expenditures DO NOT include |
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Definition
| expenditures connected with issuing or selling the corporation’s stock or other securities (e.g., commissions, professional fees, and printing costs) and expenditures related to the transfer of assets to the corporation. |
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Term
| Start-up expenditures are: |
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Definition
ordinary and necessary business expenses paid or incurred by an individual or corporate taxpayer
-To investigate the creation or acquisition of an active trade or business
-To create an active trade or business
-To conduct an activity engaged in for profit or the production of income before the time the activity becomes an active trade or business |
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Term
| f a corporation accrues an obligation to pay compensation, the corporation must make the payment within |
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Definition
| 2½ months after the close of its tax year. Otherwise, the deduction cannot be taken until the year of payment |
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Term
| Accrued charitably expenses are allowed if: |
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Definition
-The board of directors authorizes the contribution in the year accrued
-The corp pays the contribution on or before the 15th day of the 3rd month of the following year. |
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Term
| ordinary income property is |
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Definition
| property whose sale would have resulted in a gain other than a long-term capital gain (i.e., ordinary income or short-term capital gain). |
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Term
| Examples of ordinary income property include |
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Definition
| investment property held for one year or less, inventory property, and property subject to depreciation recapture under Secs. 1245 and 1250 |
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Term
| The deduction allowed for a donation of such property is limited to the property’s ... |
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Definition
| FMV minus the amount of ordinary income or short-term capital gain the corporation would have recognized had it sold the property. |
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Term
| Section 170(f)(11) imposes substantiation requirements for noncash charitable contributions |
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Definition
If the contribution deduction exceeds $500, the corporation must include with its tax return a description of the property and any other information required by Treasury Regulations.
If the contribution deduction exceeds $5,000, the corporation must obtain a qualified appraisal and include with its tax return any information and appraisal required by Treasury Regulations.
If the contribution deduction exceeds $500,000, the corporation must attach a qualified appraisal to the tax return. |
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Term
| Contribution deductions by corporations are limited to |
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Definition
| 10% of adjusted taxable income |
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Term
| Adjusted taxable income is the corporation’s taxable income computed without regard to any of the following amounts: |
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Definition
The charitable contribution deduction
An NOL carryback
A capital loss carryback
The dividends-received deduction
The U.S. production activities deduction |
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Term
| Contributions that exceed the 10% limit are not deductible in the current year. Instead, they carry forward to the next..... |
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Definition
Five tax years.
Any excess contributions not deducted within those five years expire. |
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