Reference no: EM133008456

Question - Candlewood LLC began its business on October 1, 2020; and it uses a calendar tax and an accounting year. Candlewood incurred $13,500 in legal fees for drafting the LLC's operating agreement and $6,750 in accounting fees for tax advice of an organizational nature, for a total of $20,250 of organizational costs. Candlewood also incurred $40,000 of preopening advertising expenses and $12,500 of salaries and training costs for new employees before opening for business, for a total of $52,500 of startup costs. The LLC desires to take the largest deduction available for these costs.

If required, round any division to six decimal places and use in subsequent computations. Round your final answers to the nearest dollar.

Compute Candlewood's deductions for the first year of its operations for:

a. Organizational expenses

b. Startup expenses