[MACR]

I wanted to double check that you are allowed to expense 5,000 for each of those.

So: you could expense 5,000 for Organizational expenses AND another 5,000 for Start up costs and then amortize the remainder (provided it’s less than $50,000) over 15 years.

I am just unsure reading what the Becker book has, as I have not seen a problem with both in it but not so sure..

Thanks & goodluck to all!

BEC-76, AUD 68-86, REG-80

[Anonymous]

That is such a good question. I always assumed that to “start up” a company you incur “organizational costs” so I thought that it was only $5,000 because they use the words interchangeably. But now you mentioned that it has me thinking. Hmmmm

[Anonymous]

A taxpayer can deduct up to $5,000 of start-up and $5,000 of organizational expenditures in the tax year in which the trade or business begins. Each $5,000, however, is reduced (but not below zero) by the amount by which the cumulative cost of start-up or organizational expenditures exceeds $50,000. Start-up and organizational expenditures not deductible in the year in which the trade or business begins are amortized over a 15-year period consistent with the amortization period for Sec. 197 intangibles.

A separate election statement is no longer required to elect to deduct up to $5,000 of business start-up and organizational costs paid or incurred after September 8, 2008.

[MACR]

WI- thanks for the response!

So does that mean that each category of costs is allowed $50,000 before it begins reducing the amount dollar for dollar.

Ex:

Startup Costs- 51,000. $4,000 Expensed (5,000 – (51,000- 50,000)) 47,000 Amortized.

Organ. Exp- 15,000- 5,000 expensed, 10,000 amortized.

Or is the amount cumulative?

Thanks again!

BEC-76, AUD 68-86, REG-80

[Anonymous]

I believe it is both. You can check the business expenses Pub on the IRS website and I'm sure that would help.

[Anonymous]

It is both. If you have the Becker FAR book, turn to pg F2 15.

[Author]

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