Puloso Company, a calendar year taxpayer, incurred the following start-up expenditures before the opening of its new health and fitness center. $\begin{array}{lc}
\text { Rent on commercial space } & \$6, 000 \
\text { Utilities } & 1,490 \
\text { Staff hiring and training } & 5,270 \
\text { Television advertising } & 1,600 \
& 14,360
\end{array}$
The Puloso Center opened its doors for business on March 21 of the current year. How much of the start-up expenditures can Puloso deduct this year?

Question

Puloso Company, a calendar year taxpayer, incurred the following start-up expenditures before the opening of its new health and fitness center. $\begin{array}{lc}
\text { Rent on commercial space } & \$6, 000 \
\text { Utilities } & 1,490 \
\text { Staff hiring and training } & 5,270 \
\text { Television advertising } & 1,600 \
& 14,360
\end{array}$
 The Puloso Center opened its doors for business on March 21 of the current year. How much of the start-up expenditures can Puloso deduct this year?

Quizplus · Accepted Answer

Puloso Company can deduct up to $5,000 of start-up expenditures in the current year, and the remaining expenses must be amortized over 180 months (15 years). However, since the Puloso Center opened on March 21, only a portion of the year's amortization can be deducted. The number of months from March 21 to December 31 is 9. Therefore, the amortization that Puloso can deduct this year is (19/180) x $9,520 = $1,000. Adding the $5,520 deduction for the first $5,000 of start-up costs, the total deduction for this year is $6,520.

Puloso Company, a Calendar Year Taxpayer, Incurred the Following Start-Up