Question

George incurred $35,000 in start up expenses relating to his new mini-golf business. The tax treatment of the start up expenses is:

a. deduct $5,000 immediately and amortize $30,000 over 15 years, if George makes the appropriate election

b. deductible in full from AGI in the first year of business

c. none are deductible or amortizable under any circumstances

d. amortize $50,000 over 15 years, if George makes the appropriate election

e. deduct $35,000 immediately and amortize $35,000 over 15 years, if George makes the appropriate election

Answer 1

As per section 195(b)(1)(A) of Internal Revenue Code, a taxpayer may elect to deduct a portion of startup cost in the year in which this is incurred & amortize the balance startup cost over 15 years. Hence option A is the correct answer.

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