Question

# Dale begins a new business on April 1, 2019. The business reports startup expenditures of \$52,000...

Dale begins a new business on April 1, 2019. The business reports startup expenditures of \$52,000 all incurred last year. Determine the maximum total amount that Dale can elect to deduct in 2019.

Based on the information available in the question we can answer as follows:-

Per IRS, a business can deduct upto \$5,000 of startup expenses per year during the 2019 tax year. However , the deduction is phased out dollar by dollar for every dollar of startup expenses spent in greater of \$50,000. Per the observation of the question we understand that Dale has spent \$52,000 as Startup expenses during 2019. Hence, the deduction allowed for Dale is :-

Phase - out:- \$52,000 - \$50,000 = \$2,000 phase out

Hence out of the allowed deduction of \$5,000 , \$2,000 has been phased out.

The amount that Dale can elect to deduct is \$5,000 - \$2,000 = \$3,000 of Deduction

Dale's deductoin under startup expenses = \$3,000

Please let me know if you have any questions via comments and all the best :) !

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