Question on the 1120 line 26 (other deductions).
I am working through a sim and Organizational costs and startup costs both land under this line.
Here is Ninja's explanation on the line 26 answer:
“Line 26: The other deduction is $29,000, which is the amount given in the introductory material. The start-up and organization costs were incurred in Year 4. Because the start-up costs of $60,000 exceed the $50,000 threshold amount, Tulinsky must amortize these costs over 180 months. The organization costs of $50,000, however, do not exceed the $50,000 threshold amount and thus $5,000 can be deducted in Year 4 with the remaining $45,000 being amortized over 180 months. Therefore, the deduction in Year 5 of $7,000 is computed as follows:
Start-up costs = ($60,000 ÷ 180 months) × 12 months = $4,000
Organization costs = (($50,000 – $5,000) ÷ 180 months) × 12 months = $3,000
Adding the $29,000 to this $7,000 results in a total for this line of $36,000.”
First off the start up costs you don't deduct the $5K?
Also for the Organizational costs I understand what they are doing however what I don't udnerstand is why the $5K doesn't get included in line 26 as well…so looking above under the Org costs why the $3K and the $5K aren't summed up for a total Org Cost of $8K?
Hopefully that makes sense…having a hard time explaining my thinking!
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