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Start-up costs

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    Start-up costs

    The new rules say you can deduct up to $5,000 in the year the business begins. Any additional costs are amortized over 15 years.

    What if I want to just amortize all of the costs including the first $5,000 over 5 years under the old rules? Can I still do that?

    No. Recovery of organizational costs and start-up costs either fall under the old rules (60-month amortization) or the new rules ($5,000 deduction, 180-month amortization of remainder), depending on when the costs were incurred.

    If the costs were incurred on or before October 22, 2004, the old rules apply and the costs can be amortized over 60 months.

    If the costs were incurred after October 22, the new rules apply. You can deduct the first $5,000, then you can amortize the remainder over 180 months starting with the month the business begins. If you go above $50,000 in total, the $5,000 deduction is reduced dollar-for-dollar.