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, 2015. How much of the start-up expenditures can Puloso deduct in 2015?

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, 2015. How much of the start-up expenditures can Puloso deduct in 2015?

Quizplus · Accepted Answer

Puloso Company can deduct up to $5,000 of its start-up expenditures in the year it begins business. Since Puloso opened on March 21, 2015, it can deduct a prorated amount of $5,000 based on the number of months it was in business. The company was in business for 10 out of the 12 months in 2015, so it can deduct $5,000 x (10/12) = $4,166.67. Additionally, Puloso can elect to amortize the remaining start-up expenditures over a 180-month period starting in March 2015, which would result in an additional deduction of $360 per month for a total of $1,854. Therefore, the total deduction for 2015 is $4,166.67 + $1,854 = $5,520.

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