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, 2013. How much of the start-up expenditures can Puloso deduct in 2013?

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, 2013. How much of the start-up expenditures can Puloso deduct in 2013?

Quizplus · Accepted Answer

Puloso can elect to deduct up to $5,000 of the start-up expenditures in the tax year in which the active trade or business begins. However, since Puloso incurred $14,360 of start-up expenditures, the remaining $9,360 must be amortized over 180 months, beginning in March 2013, the month in which the business began. Therefore, the deductible amount in 2013 is $5,000 + ($9,360/180*10) = $5,520.

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