New S Corp 2015

[S T]

Again, when does a Business Commence.

Have a client that formed a New Corp (c-Corp) election made with IRS and accepted to file as an S-Corp for 2015 due 3/2016

Still trying to obtain details, so far the Corp was formed to deal with investments and a Family Trust.

No activity for 2015 other than Legal Fees, Secretary of State Fees and Business License for the normal formation of a Corporation.

Since there is no business activity as in acquiring assets and producing some form of income, even though we have a FEIN, stating that return is due,

Am I correct that the Legal fees, etc are organization expenses, need to be capitalized, however, I cannot amortize for 2015, as the Corp conducted no business activity other than the formation and issuing shares of stock. No deduction for amortizing the Org Expenses.

Would the Start of the The Corp business activity commence when Assets are placed in the Corp name, i.e. stock/investments - hopefully - other than real estate ------

If and when Corp finally becomes active in placing Investment Assets into the Corp, then the Clock will start on Amortizing the Organizational Expenes?

Thanks

Sandy

[Roland Slugg]

Even though the corporation has conducted no business, it still may have to file a tax return for its initial year. However, see Regs §1.6012-2(a)(2). In any case, the organization costs can't be deducted (via amortization or full write-off) until the corporation actually commences to do business.

From what you said about the corporation's planned activity, however ... i.e. holding of investments ... it may be a PHC, and if it is, is can't be an S Corp. See Code §1363(a).