Discussion:Just how do you write of Start Up costs?
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Discussion Forum Index --> Tax Questions --> Just how do you write of Start Up costs?
| 9 March 2006 | |
| Just how do you write off Start Up costs? Do you go through the depreciation schedule? Do you just expense them as a line item under expenses? I know that I need the election. | |
| 9 March 2006 | |
| Yes, I know the election. However on the forms - how do I write them off? Do you go through the depreciation schedule? Do you just expense them as a line item under expenses | |
| 9 March 2006 | |
| If you are using Pro Series, you can set up an asset on an Asset Entry Worksheet. Enter the amount (less the $5000 which you may want to expense directly). Use Asset Type Code L, Amortizable Intangibles. Further down there is a line that says "Enter the IRC section under which you amortize the cost of the intangibles. If you right-click that field it will take you to the instructions which will contain a hot-link to a list of amortization code sections (not exhaustive). There you will find Section 195. But you already knew that because of this thread. Enter 195 into that field. Unfortunately Pro Series does not know the new law, so you will need to go down the page to the "Recovery Period" field and enter 15. It will then calculate the amortization. It will not plunk it onto the line for depreciation (line 13 for a Schedule C) but will throw it down on Part V, Other expenses, and will describe it as Amortization. (Same is true for 1120/1120S, but will put it on the appropriate line).
Alternatively, you can calculate it yourself and put it on the same line. The disadvantage of doing it yourself this way is that it will not appear on Form 4562, Part VI, but I often do it that way, nonetheless. In other software, you're on your own. Good luck. | |
| 9 March 2006 | |
| Thanks - I didn't know if I had to still use 4562 or could go straight to an expense line item. I'll use the 4562. | |
Www.cpa1.biz (talk|edits) said: | 1 February 2007 |
| Since there is not line item for start up expenses do we just put "start up expenses" under other deductions.
thx | |
| 1 February 2007 | |
| If it is less than $5000. I'd just use the simple "other deductions" area. I don't see a need to go to Form 4562 unless it is more than $5000. | |
| February 1, 2007 | |
| Follow JDugan's instructions and the amortization will be automatically calculated every year and placed in Other Deductions on Sch C. | |
| 20 March 2008 | |
| the question is if the start up expenses is less then 5K where do you deduct it? | |
| March 20, 2008 | |
| discussion: Start Up Costs | |
| 20 March 2008 | |
| does it just go on the schedule C of sole proprietor or do is there something to do on the 4562 | |
| April 12, 2008 | |
| In which year are they to be deducted?
Client incurred $15k startup expenses in 2007 when business was not yet active. (To date, its still not active but that's another story.) Can I take $5k of these expenses on his 2007, amortizing the balance, or can they only be claimed at a time the business is "active", i.e., 2008 or later? | |
Nancyshoemake (talk|edits) said: | 12 April 2008 |
| I would wait until the business has the "doors open". | |
RoyDaleOne (talk|edits) said: | 12 April 2008 |
| Example for grins: $15,000 startup
Put $5,000 in the other deductions "direct expense of startup costs $5,000". Do election attachment. Put $10,000 on the 4562, amortization, however your software or pencil wants you to do that. Note: there is a start of active business requirement, therefore, if the business has not actively started as required by Section 195 hold the amounts until the year the business does actively start. If the amount is under $5,000 then use the actual amount. | |
Nancyshoemake (talk|edits) said: | 12 April 2008 |
| NTG - thats what we are all here for, right? | |
