I need help!
lt Partnership, a cash basis calendar year entity, began business on October 1, Year 1. Alt incurred and paid the following in Year 1:
Legal fees to prepare the partnership agreement $ 23,000
Accounting fees to prepare the representations in offering materials 15,000
Alt elected to amortize costs. What was the maximum amount that Alt could deduct on the Year 1 partnership return?
a. $0
b. $5,300
c. $300
d. $4,600
Explanation
Choice “b” is correct. Eligible expenditures up to $5,000 can be deducted in the first year (with overall limitations). Additional expenditures are amortized over 180 months beginning with the date they begin business. Legal fees to prepare the partnership agreement ($23,000) are eligible for this treatment, but sales and promotional expenses ($15,000) are not deductible or amortizable. – where did sales and promo come from, all is see is accounting fees and legal fees – some one help!
The first year deduction is calculated as follows:
23,000
(5,000)
immediate deduction
18,000 /
180 months = $100 per month x 3 = 300 + 5,000 = $5,300
.