April 20, 2015
1. In general.
1. While begin a business, an electing corporation may deduct an amount
equal to the lesser of the amount of the organizational expenditures of the
corporation, or $5,000 maximum whenever the organizational expenditures
exceed $50,000.
2. Then, the remaining amount can be deducted over the 180-month period
beginning with the month in which the corporation begins business.
1. Organizational expenditures defined.
1. The expenditures that are directly incident to the creation of the corporation.
2. It must be:
1. incident to the creation of the corporation,
2. chargeable to the capital account of the corporation, and
•if expended incident to the creation of a corporation having a limited life, it would
be amortizable over its life.
1. In order to be an expenditure, it must meet each of these three tests.
1. Time and manner of making election.
1. A corporation may choose to forgo the deemed election by affirmatively
electing to capitalize its organizational expenditures on a timely filed
Federal income tax return (including extensions) for the taxable year when
beginning the business.
2. The election either to amortize organizational expenditures under section
248(a) or to capitalize organizational expenditures is irrevocable. It may
apply to all organizational expenditures of the corporation.
3. Whenever the corporation treated the item consistently for two or more
taxable years, a change in the characterization can occurred. It is also