Are Form 1120 Schedule M 3 Expenditures 2019-2024

Hello and welcome to this session. This is Professor Farhad and the session will look at organizational expenditure. First, let's find out what our organization's expenditure on organizational expenditure is. Our expenditure is incurred before the business is incorporated. So, what are some examples of these organizational expenditures? Well, one of them is legal services incident to the organization, necessary accounting services, expenses of temporary directors, an organizational meeting of directors and shareholders, and fees paid to the state of incorporation. Basically, these are necessary expenses to incorporate the business. So, what do we do with organizational expenditure? A corporation may choose to amortize organizational expenditure over 180 months, starting from the month in which the corporation begins business. So, once you begin business, you will take those expenditures called organizational expenditure and amortize them. Now, remember not to confuse this with GAAP. GAAP requires you to expense those expenditures. It's a little different. I just want to point this out so you can compare and contrast IRS rules to GAAP rules. Now, the IRS gives you a special exception. What's that special exception? It allows the corporation to expense the first $5,000 of these costs. We would allow you to expense up to $5,000, but there's a catch. The catch is that there's a phase-out on a dollar-for-dollar basis when these expenses exceed $50,000. Simply put, if you have organizational expenses more than $55,000, you cannot take the immediate expense. For every dollar above $50,000, you would lose $1 in deduction. So, once you reach $55,000, you lose the $5,000 immediate deduction. What does organizational expenditure include? We already talked about this. It includes legal services, accounting services, expenses related to temporary directors, and fees paid to the state of incorporation. What about expenditure connected with issuing or selling...