[Anonymous]

Is the total deduction limited to $5,000 for both or $5,00 for the two different categories?

I don’t know how to differentiate between organizational expenditure & start-up costs because I thought they were essentially the same.

[momto5]

I wondered the same as Becker says $5000 of each, but I haven't seen any questions or examples that ever use both.

FAR - 92 (4/27/12)
AUD - 96 (7/17/12)
BEC - 92 (8/30/12)
REG - 91 (11/12/12)

[Anonymous]

It's up to $5000 in the year of start up for both categories but if costs exceed 5,000 for either category the $5000 is reduced $1 for $1 for the excess. The excess needs to be amortized – I think over 180 months. The categories are definitely different. Start up are one time activity costs that if you incurred them during normal business operations they would be deductible. Such as advertising (grand opening), rent ( in advance of opening), website (creation) Organizational costs are costs you like state incorporation fees, legal start up expenses – fees for organizing the business – you'd never pay these kind of fees again.

Happy studying!

[Anonymous]

oops that should be if cost exceeds $50,000 the $5,000 is reduced by the excess.

[nimmle02]

Exam trick: Be sure to look at the date the company started up for the amortized portion of the cost. So if the company started on 7/1, you will amortize 6 out of the 180 months.

That tripped me up for awhile and then I got into the habit of checking the dates for EVERYTHING.

REG - 5/21/2012 - 85
FAR - 7/24/2012 - 86
BEC - 8/27/2012 - 85
AUD - 10/5/2012 - 72....rematch 1/3/13 (waiting)

[momto5]

@CPA_Driven – thanks so much for the explanation! Maybe you should write for Becker!

@nimmie02 – thanks for the extra tip!

FAR - 92 (4/27/12)
AUD - 96 (7/17/12)
BEC - 92 (8/30/12)
REG - 91 (11/12/12)

[Author]

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