This article will help you:
- Setup a section election for amortization of organizational expenditures
- Setup a section election for amortization of start up expenditures.
- Select your tax type below to get started:
Entering the elections for a S corporation
Step 1: Completing the IRC Election Statement:
- Open the tax return.
- Press F6 to bring up Open Forms.
- Type IRC and click OK to open the IRC Elections.
- Double-click on line 3 to open the election statement for section 248(a) or line 4 for section 195(b).
- Enter the name and description of the trader or business and the month in which business began.
- Entering all expenditures in the table.
- Enter the deductible amount of expenses from line 1 on 1120S, page 1, line 19; Other deductions.
- If expenses exceed the maximum deduction of $5,000, an asset entry worksheet must be created to amortize the remaining expenses.
Step 2: Completing the Asset Entry Worksheet:
This step only needs to be completed if the expenses from Step 1 are over the 5,000 maximum deduction.
- Press F6 to bring up Open Forms.
- Type DEE and select OK.
- Enter a description to match the organizational expenses and select Finish.
- Select the 1120S Depr Option and Select Finish.
- Enter the dates to begin the amortization deductions.
- For Cost or other basis, enter the amount of the expenses that are to be amortized.
- For Type of asset, select code L.
- Scroll down to the line IRC section under which intangible asset cost is amortized and enter 248 or 195.
- Scroll down to the Recovery period and enter the number of years to amortize expenditures.
Entering the elections for a Corporation
Step 1: Completing the IRC Election Statement:
- Open the tax return.
- Press F6 to bring up Open Forms.
- Type IRC and click OK to open the IRC Elections.
- Double-click on line 3 to open the election statement for section 248(a) or line 4 for section 195(b).
- Enter the name and description of the trader or business and the month in which business began.
- Entering all expenditures in the table.
- Enter the deductible amount of expenses from line 1 on 1120, page 1, line 26; Other deductions.
- If expenses exceed the maximum deduction of $5,000, an asset entry worksheet must be created to amortize the remaining expenses.
Step 2: Completing the Asset Entry Worksheet:
This step only needs to be completed if the expenses from Step 1 are over the 5,000 maximum deduction.
- Press F6 to bring up Open Forms.
- Type DEE and select OK.
- Enter a description to match the organizational expenses and select Finish.
- Select the 1120 Depr Option and Select Finish.
- Enter the dates to begin the amortization deductions.
- For Cost or other basis, enter the amount of the expenses that are to be amortized.
- For Type of asset, select code L.
- Scroll down to the line IRC section under which intangible asset cost is amortized and enter 248 or 195.
- Scroll down to the Recovery period and enter the number of years to amortize expenditures.
Entering the elections for a Partnership
Step 1: Completing the IRC Election Statement:
- Open the tax return.
- Press F6 to bring up Open Forms.
- Type IRC and click OK to open the IRC Elections.
- Double-click on line 2 to open the election statement for section 195(b) or line 3 for section 709(b)
- Enter the name and description of the trader or business and the month in which business began.
- Entering all expenditures in the table.
- Enter the deductible amount of expenses from line 1 on 1065, page 1, line 20; Other deductions.
- If expenses exceed the maximum deduction of $5,000, an asset entry worksheet must be created to amortize the remaining expenses.
Step 2: Completing the Asset Entry Worksheet:
This step only needs to be completed if the expenses from Step 1 are over the 5,000 maximum deduction.
- Press F6 to bring up Open Forms.
- Type DEE and select OK.
- Enter a description to match the organizational expenses and select Finish.
- Select the 1065 Depr Option and Select Finish.
- Enter the dates to begin the amortization deductions.
- For Cost or other basis, enter the amount of the expenses that are to be amortized.
- For Type of asset, select code L.
- Scroll down to the line IRC section under which intangible asset cost is amortized and enter 195 or 709.
- Scroll down to the Recovery period and enter the number of years to amortize expenditures.
Entering the elections for an Individual
Step 1: Completing the IRC Election Statement:
- Open the tax return.
- Press F6 to bring up Open Forms.
- Type EL and click OK to open the Individual Elections Summary.
- Double-click on line 11 to open the election statement for section 195(b).
- Enter the name and description of the trader or business and the month in which business began.
- Entering all expenditures in the table.
- Enter the deductible amount of expenses from line 1 on the business activity (Such as the Schedule C) as an Other Deduction.
- If expenses exceed the maximum deduction of $5,000, an asset entry worksheet must be created to amortize the remaining expenses.
Step 2: Completing the Asset Entry Worksheet:
This step only needs to be completed if the expenses from Step 1 are over the 5,000 maximum deduction.
- Press F6 to bring up Open Forms.
- Type DEE and select OK.
- Enter a description to match the organizational expenses and select Finish.
- Select the business activity and Select Finish.
- Enter the dates to begin the amortization deductions.
- For Cost or other basis, enter the amount of the expenses that are to be amortized.
- For Type of asset, select code L.
- Scroll down to the line IRC section under which intangible asset cost is amortized and enter 195.
- Scroll down to the Recovery period and enter the number of years to amortize expenditures.
Entering the elections for a Fiduciary
Step 1: Completing the IRC Election Statement:
- Open the tax return.
- Press F6 to bring up Open Forms.
- Type EL and click OK to open the Individual Elections Summary.
- Double-click on line 7 to open the election statement for section 195(b).
- Enter the name and description of the trader or business and the month in which business began.
- Entering all expenditures in the table.
- Enter the deductible amount of expenses from line 1 on the 1041, page 1, line 15a; Other deductions or the business activity the expenses are tied to.
- If expenses exceed the maximum deduction of $5,000, an asset entry worksheet must be created to amortize the remaining expenses.
Step 2: Completing the Asset Entry Worksheet:
This step only needs to be completed if the expenses from Step 1 are over the 5,000 maximum deduction.
- Press F6 to bring up Open Forms.
- Type DEE and select OK.
- Enter a description to match the organizational expenses and select Finish.
- Select Line 15a or the business acitity and Select Finish.
- Enter the dates to begin the amortization deductions.
- For Cost or other basis, enter the amount of the expenses that are to be amortized.
- For Type of asset, select code L.
- Scroll down to the line IRC section under which intangible asset cost is amortized and enter 195.
- Scroll down to the Recovery period and enter the number of years to amortize expenditures.