Problem 11-6 Special Deductions and Limitations (LO 11.3)

Beech Corporation, an accrual basis calendar year taxpayer, was organized and began business on July 1st of the current calendar tax year. During the current year, the corporation incurred the following expenses:

State fees for incorporation $ 500 Legal and accounting fees incident to organization 4,150 Expenses for the sale of stock 2,100 Organizational meeting expenses 750

Assuming that Beech Corporation does not elect to expense but chooses to amortize organizational expenditures over 15 years, calculate the corporation's deduction for its current calendar tax year. $____________

Problem 11-6 (Algorithmic) Special Deductions and Limitations (LO 11.3)

Bill and Guilda each own 50 percent of the stock of Radiata Corporation, an S corporation. Guilda's basis in her stock is $21,000. On May 26, 2020, Bill sells his stock, with a basis of $40,000, to Loraine for $50,000. For the 2020 tax year, Radiata Corporation has a loss of $104,000.

Round your final answers to the nearest dollar. Use a 365-day year in your computations.

a. Calculate the amount of the corporation's loss that may be deducted by Bill on his 2020 tax return. $______________

b. Calculate the amount of the corporation's loss that may be deducted by Guilda on her 2020 tax return. $______________

c. Calculate the amount of the corporation's loss that may be deducted by Loraine on her 2020 tax return. $______________

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