JebSim Inc. was organized on June 1, 2012, and began business on August 10. JebSim elected a calendar year for tax purposes. The corporation incurred $25,160 of legal and other professional fees attributable to its formation. How much of these costs can JebSim deduct on its first tax return?

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Quizplus · Accepted Answer

JebSim can deduct up to $5,000 of start-up costs in its first year, with the remainder amortized over 180 months. Here, $5,000 is deductible immediately, and the remaining $20,160 is amortized, resulting in an additional $560 deduction for the first year.