Startup costs

[DTS]

I have a client who incurred startup costs of $2,200 before October 22, 2004. She then had additional startup costs of $3,500 after 10/22/04 before opening by years-end.

Am I correct in assuming I can expense the $3,500 plus $37 (one month of amortization)?

Thank you, Dennis

[BOB W]

Startup

When did the business actually open for business?

[DTS]

Startup

Bob,

She officially opened around Dec. 1 or 2.

Thanks, Dennis

[BOB W]

Startup

I would capitalize everything. The deduction may be worth more over the 60 months since it is a new business.

[Armando Beaujolais]

The costs incurred pre 10/22 are eligible for 60-month amortization. The costs incurred post 10/22 must be amortized over 180 months if not deducted.

[BOB W]

Amort

The start date of the business is 12/1/04. All costs are pre start date.

[Armando Beaujolais]

I don't believe that's correct.

The business start date, in this case 12/1, applies only to the point at which amortization begins. The business start date does not determine the recovery period.

Costs paid or incurred before 10/22 are recovered under the old rules, 60-month amortization. Costs paid or incurred after 10/22 are recovered under the new rules, up to $5,000 deduction or amortized over 180 months. In either case, amortization starts on the same start date, 12/1.

[DTS]

Thanks

Armando and Bob,

Thank you for the help. I appreciate it.

Dennis

[BOB W]

Amort

I wasn't aware of the 10/22 date.... thanks