Discussion:Start Up Costs

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Discussion Forum Index --> Tax Questions --> Start Up Costs


DJS3591 (talk|edits) said:

1 June 2006
A client officially opens for business on April 1 and starts generating revenue on that date. From Feb. 1 to March 31, he pays for 1 year's insurance premium, licenses and permits to operate, advertising and advance deposits on expenses. Are these costs all subject to amortization as start up costs?

Riley2 (talk|edits) said:

2 June 2006
Sec. 195 start-up exependitures, by definition, are expenses that would have been deductible in the year incurred or paid if paid by an active trade or business. It sounds like some of these expenses would have deductible by an active trade or business in the year paid or incurred and would be subject to the start-up cost rule.

Lois (talk|edits) said:

3 June 2006
The licenses; permits; advertising are start up costs.

The deposits are a balance sheet entry. The insurance is a pre-pmt balance sheet entry also. The 2 months of insurance used until 4/1 would be start up costs also.

Gmikeg (talk|edits) said:

4 June 2006
Don't forget that your client may deduct $5000 of the start-up costs the first year to the extent that they do not exceed $5000. And like me, don't confuse start-up with organizational expenses

(Sec. 709(b)).

Gmikeg (talk|edits) said:

4 June 2006
I forgot; the start-up expenses are deductible even if they exceed $5000, but the deduction is reduced dollar-for-dollar to the extent they exceed $5000.....

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