Puloso Company, a calendar year taxpayer, incurred the following start-up expenditures before the opening of its new health and fitness center. The Puloso Center opened its doors for business on March 21, 2011. How much of the start-up expenditures can Puloso deduct in 2011?

Question

Puloso Company, a calendar year taxpayer, incurred the following start-up expenditures before the opening of its new health and fitness center.  The Puloso Center opened its doors for business on March 21, 2011. How much of the start-up expenditures can Puloso deduct in 2011?

Quizplus · Accepted Answer

Puloso Company can deduct up to $5,000 in start-up expenditures in the year the business begins operations, which is 2011 in this case. However, since Puloso incurred $19,360 in start-up expenditures, the remaining $14,360 can be amortized (deducted) over 180 months (15 years). Therefore, the total deduction in 2011 would be $5,000 + ($14,360/180 months * 10 months) = $5,520.

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