Question

In the current year the XYZ partnership incurs $35,000 of expenses that qualified as organizational expenses....

In the current year the XYZ partnership incurs $35,000 of expenses that qualified as organizational expenses. They are a calendar year partnership, and begin business in July of the current year. How much is their amortization of the organizational expenses in the current year, assuming they elect the maximum of each? Round to the nearest dollar.

a. $180,000

b. $167

c. $1,167

d. $1,000

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Answer #1

XYZ partnership can claim $5000 of the top as current deduction and the remaining amount must be amortised over period of 180 month.

Assuming that XYZ partnership claims of the top deduction.

Therefore $35000-$5000= $30000

Then, $30,000/180 months=$166.67 = $167 per month

Now as the Partnership is operating on calendar basis the calculation would be from January-December.

If you look the business begins in July. Therefore from July to December are 6 months.

And therefore , $166.67*6 months = $1000

Option D.

Please do provide with your valuable feedback. And help me answer better.

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