The MNO Partnership,a calendar year taxpayer,was formed on July 1 of the current year and started business on October 1.MNO incurred $3,000 of legal fees on formation and $30,000 in start-up costs.MNO may deduct $5,000 and amortize the remaining $28,000 over 180 months starting in July,for $933 in the current year.

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All organization costs incurred by the end of the first taxable year of the partnership may be expensed (up to $5,000)and the balance amortized over 180 months commencing with the month the taxpayer begins business.The same rule applies to start-up costs.MNO can deduct the first $5,000 of each type of expense ($8,000 total-$3,000 organization and $5,000 of start-up)and amortize the remainder over 180 months,starting in the month operations begin ($25,000 ÷ 180 F1F1F1S1F1F1F10 3 = $417).

The MNO Partnership,a Calendar Year Taxpayer,was Formed on July 1