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    I y I - D - S I - (E o - T, L: Module 36 Taxes: Corporate

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    Zeyad El-sayed
    This document discusses corporate tax rules regarding organizational expenditures, charitable contributions, and dividends received deductions. Specifically, it notes that: 1) Organizational expenditures must generally be amortized over 15 years or can be deducted if the corporation elects to do so by the due date of its first tax return. 2) Charitable contributions are limited to 10% of taxable income before certain deductions and carryforwards, and excess contributions can be carried forward for up to 5 years. 3) A 100% dividends received deduction is available for dividends from affiliated corporations if a consolidated return is not filed, and intercompany dividends are eliminated if one is filed.

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    I y I - D - S I - (E o - T, L: Module 36 Taxes: Corporate

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    Zeyad El-sayed
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    This document discusses corporate tax rules regarding organizational expenditures, charitable contributions, and dividends received deductions. Specifically, it notes that: 1) Organizational expenditures must generally be amortized over 15 years or can be deducted if the corporation elects to do so by the due date of its first tax return. 2) Charitable contributions are limited to 10% of taxable income before certain deductions and carryforwards, and excess contributions can be carried forward for up to 5 years. 3) A 100% dividends received deduction is available for dividends from affiliated corporations if a consolidated return is not filed, and intercompany dividends are eliminated if one is filed.

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    This document discusses corporate tax rules regarding organizational expenditures, charitable contributions, and dividends received deductions. Specifically, it notes that: 1) Organizational expenditures must generally be amortized over 15 years or can be deducted if the corporation elects to do so by the due date of its first tax return. 2) Charitable contributions are limited to 10% of taxable income before certain deductions and carryforwards, and excess contributions can be carried forward for up to 5 years. 3) A 100% dividends received deduction is available for dividends from affiliated corporations if a consolidated return is not filed, and intercompany dividends are eliminated if one is filed.

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    © All Rights Reserved
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    13 views2 pages

    I y I - D - S I - (E o - T, L: Module 36 Taxes: Corporate

    Uploaded by

    Zeyad El-sayed
    This document discusses corporate tax rules regarding organizational expenditures, charitable contributions, and dividends received deductions. Specifically, it notes that: 1) Organizational expenditures must generally be amortized over 15 years or can be deducted if the corporation elects to do so by the due date of its first tax return. 2) Charitable contributions are limited to 10% of taxable income before certain deductions and carryforwards, and excess contributions can be carried forward for up to 5 years. 3) A 100% dividends received deduction is available for dividends from affiliated corporations if a consolidated return is not filed, and intercompany dividends are eliminated if one is filed.

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    568 MODULE 36 TAXES: CORPORATE

    (3) For amounts paid or incurred before September 9,2008, the election must be made by the due
    date for filing the taxreturn (including extensions) for the tax year in which the corporation
    begins business, and applies to expenditures incurred before the end of the tax year in which
    the corporation begins business (even if the amounts have not yet been paid by a cash-method
    corporation).
    (4) Organizational expenditures include expenses of temporary directors and organizational meet-
    ings, state fees for incorporation, accounting and legal service costs incident to incorporation
    (e.g., drafting bylaws, minutes of organizational meetings, and terms of original stock certifi-
    cates). _
    (5) Expenditures connected with issuing or selling shares of stock, or listing stock on an exchange
    are neither deductible nor amortizable. Expenditures connected with the transfer of an asset to
    the corporation must be capitalized as part of the cost of the asset.
    3. The deduction for charitable contributions is limited to 10% of taxable income before the con-
    tributions deduction, the dividends received deduction, a net operating loss carryback (but after
    carryover), and a capital loss carryback (but after carryover).
    (1) Generally the same rules apply for valuation of contributed property as for individuals except
    (a) Deduction for donations of inventory and other appreciated ordinary income-producing
    property is the donor's basis plus one-half of the unrealized appreciation but limited
    to
    twice the basis, provided
    1] Donor is a corporation (but not an S corporation)
    2] Donee must use property for care of ill, needy, or infants
    3] Donor must obtain a written statement from the donee that the use requirement has
    been met I

    4] No deduction allowed for unrealized appreciation that would be ordinary income un-
    der recapture rules .
    (b) Deduction for donation of appreciated scientific personal property to a college or univer-
    sity is the donor's basis plus one-half the unrealized appreciation but limited to twice
    the
    basis, provided .
    1] Donor is a corporation (but not an S corporation, personal holding company, or ser-
    vice organization)
    2] Property was constructed by donor and contributed within two years of substantial
    completion, and donee is original user of property
    3] Donee must use property for research or experimentation
    4] . Donor must obtain a written statement from the donee that the use requirement has
    been met
    5] No deduction allowed for unrealized appreciation that would be ordinary income un-
    der recapture rules
    (2) Contributions are deductible in period paid (subject to 10% limitation) unless corporation is an
    accrual method taxpayer and then deductible (subject to 10% limitation) when authorized by
    board of directors if payment is made within 2 112 months after tax year end, and corporation
    elects to deduct contributions when authorized.
    (3) Excess contributions over the 10% limitation may ~e carried forward for up to five years.
    EXAMPLE: The books of a calendar-year, accrual method corporation for 2008 disclose net income of
    $350,000 after deducting a charitable contribution of $50,000. The contribution was authorized by the Board
    of Directors on December 24, 2008, and was actually paid on January 31, 2009. The allowable charitable
    contribution deduction for 2008 (if the corporation elects to 'deduct it when accrued) is $40,000, calculated as
    follows: ($350,000 + $50,000) x.1O = $40,000. The remaining $10,000 is carriedforwardfor up tofive
    years.
    4. A 100% DRD for dividends received from affiliated (i.e., at least 80% owned) corporations if a
    consolidated tax return is not filed.
    (1) If a consolidated tax return is filed, intercompany dividends are eliminated and not included in
    consolidated gross income.
    (2) See Section D. for 'discussion of affiliated corporations

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