Question

Bill, a long-time investment banker, wants to start a luxury resort at one his favorite vacation spots on the west coast. Identify examples of start-up costs and organizational costs that Bill should expect to incur. What tax considerations should Bill keep in mind for the first year of business? Are there advantages to capitalizing such costs rather than amortizing? Please write a response of at least 200 words.

Answer 1

When starting up a business there might be multiple expenses, those are Stationary, Insurance, Rent, Legal fees, Research and Development, Equipment. These all-preliminary expenses will be able to be capitalized or amortized over 15 years of the startup year,

And if the overall startup costs

50,000 or less           -   the company can deduct 5,000 off the first year

50,000 and 55,000   -   can deduct up to 5,000 in excess of above

Over 55,000              -    Not possible to deduct anything

I hope this will help you.