Question

Patin Corporation began business on September 23rd of the current year. It incurred the following costs prior to opening to customers: $26,560 employee training, $5,000 supplies, $41,457 legal, and $10,000 accounting. How much may be deducted in the first year (the current year)? (Round final answer to the nearest whole dollar.)

Answer 1

The whole amount of dedications that may be allowed in the first year would be $10,000.

EXPLANATION

Certain deductions are allowed by the government authorities, here (IRS) provides certain deductions in the first year of business.

These deductions are allowed from the costs incurred prior the business which may involve employees training costs, marketing and advertising costs etc.

Total of $10,000 of costs are allowed as deduction which includes $5,000 as startup deductions and $5,000 from business alllowable expenses.

Here allowable expenses are : 26,560 employee training, $5,000 supplies, $41,457 legal, and $10,000 accounting.

Only $5,000 is allowed as deduction for the above.