IRS issues final rules relating to election to deduct business startup expenses
The regulations, issued Tuesday, come as a result of amendments made to the American Jobs Creation Act of 2004, allowing limited deductions of these types of expenses paid or incurred after Oct. 22, 2004. The new regulations provide guidance on how to make the deductions properly.
According to the rules, a taxpayer can deduct “an amount equal to the lesser of (1) the amount of the start-up or organizational expenditures that relate to the active trade or business, or (2) $5,000, reduced (but not below zero) by the amount by which the start-up expenditures exceed $50,000.” The rules go on to say, “The remainder of the start-up expenditures is deductible ratably over the 180-month period beginning with the month in which the active trade or business begins.” Similar rules apply to corporations or partnerships.
For full guidance, including several examples on how to apply the rules, go to www.ofr.gov/OFRUpload/OFRData/2011-20872_PI.pdf.
Voice of the Editor
Which isn’t completely true. I mean, occasionally I drop by when I manage to sneak out of the nonstop frat party over at Going Concern, but I’m mostly a wallflower over there. I’m happy to say that I’ve been given express permission (or explicit orders, if you like) to wander over here to AccountingWEB more often.
Why is that, you might ask? My job is to replace the irreplaceable Gail Perry as Editor-in-Chief. What does that mean? I don’t really know! I think it’ll be fun getting a feel for things, throwing in my own thoughts here and there, and listening to the discussions you’re having about the accounting profession.