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Amortization of organizational expenses and start up costs

SOLVEDby IntuitProSeries Professional55Updated August 30, 2021

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:

Step 1: Completing the IRC Election Statement:

  1. Open the tax return.
  2. Press F6 to bring up Open Forms.
  3. Type IRC and click OK to open the IRC Elections.
  4. Double-click on line 3 to open the election statement for section 248(a) or line 4 for section 195(b).
  5. Enter the name and description of the trader or business and the month in which business began.
  6. Entering all expenditures in the table.
  7. Enter the deductible amount of expenses from line 1 on 1120S, page 1, line 19; Other deductions.
  8. 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.

  1. Press F6 to bring up Open Forms.
  2. Type DEE and select OK.
  3. Enter a description to match the organizational expenses and select Finish.
  4. Select the 1120S Depr Option and Select Finish.
  5. Enter the dates to begin the amortization deductions.
  6. For Cost or other basis, enter the amount of the expenses that are to be amortized.
  7. For Type of asset, select code L.
  8. Scroll down to the line IRC section under which intangible asset cost is amortized and enter 248 or 195.
  9. Scroll down to the Recovery period and enter the number of years to amortize expenditures.

Step 1: Completing the IRC Election Statement:

  1. Open the tax return.
  2. Press F6 to bring up Open Forms.
  3. Type IRC and click OK to open the IRC Elections.
  4. Double-click on line 3 to open the election statement for section 248(a) or line 4 for section 195(b).
  5. Enter the name and description of the trader or business and the month in which business began.
  6. Entering all expenditures in the table.
  7. Enter the deductible amount of expenses from line 1 on 1120, page 1, line 26; Other deductions.
  8. 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.

  1. Press F6 to bring up Open Forms.
  2. Type DEE and select OK.
  3. Enter a description to match the organizational expenses and select Finish.
  4. Select the 1120 Depr Option and Select Finish.
  5. Enter the dates to begin the amortization deductions.
  6. For Cost or other basis, enter the amount of the expenses that are to be amortized.
  7. For Type of asset, select code L.
  8. Scroll down to the line IRC section under which intangible asset cost is amortized and enter 248 or 195.
  9. Scroll down to the Recovery period and enter the number of years to amortize expenditures.

Step 1: Completing the IRC Election Statement:

  1. Open the tax return.
  2. Press F6 to bring up Open Forms.
  3. Type IRC and click OK to open the IRC Elections.
  4. Double-click on line 2 to open the election statement for section 195(b) or line 3 for section 709(b)
  5. Enter the name and description of the trader or business and the month in which business began.
  6. Entering all expenditures in the table.
  7. Enter the deductible amount of expenses from line 1 on 1065, page 1, line 20; Other deductions.
  8. 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.

  1. Press F6 to bring up Open Forms.
  2. Type DEE and select OK.
  3. Enter a description to match the organizational expenses and select Finish.
  4. Select the 1065 Depr Option and Select Finish.
  5. Enter the dates to begin the amortization deductions.
  6. For Cost or other basis, enter the amount of the expenses that are to be amortized.
  7. For Type of asset, select code L.
  8. Scroll down to the line IRC section under which intangible asset cost is amortized and enter 195 or 709.
  9. Scroll down to the Recovery period and enter the number of years to amortize expenditures.

Step 1: Completing the IRC Election Statement:

  1. Open the tax return.
  2. Press F6 to bring up Open Forms.
  3. Type EL and click OK to open the Individual Elections Summary.
  4. Double-click on line 11 to open the election statement for section 195(b).
  5. Enter the name and description of the trader or business and the month in which business began.
  6. Entering all expenditures in the table.
  7. Enter the deductible amount of expenses from line 1 on the business activity (Such as the Schedule C) as an Other Deduction.
  8. 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.

  1. Press F6 to bring up Open Forms.
  2. Type DEE and select OK.
  3. Enter a description to match the organizational expenses and select Finish.
  4. Select the business activity and Select Finish.
  5. Enter the dates to begin the amortization deductions.
  6. For Cost or other basis, enter the amount of the expenses that are to be amortized.
  7. For Type of asset, select code L.
  8. Scroll down to the line IRC section under which intangible asset cost is amortized and enter 195.
  9. Scroll down to the Recovery period and enter the number of years to amortize expenditures.

Step 1: Completing the IRC Election Statement:

  1. Open the tax return.
  2. Press F6 to bring up Open Forms.
  3. Type EL and click OK to open the Individual Elections Summary.
  4. Double-click on line 7 to open the election statement for section 195(b).
  5. Enter the name and description of the trader or business and the month in which business began.
  6. Entering all expenditures in the table.
  7. 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.
  8. 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.

  1. Press F6 to bring up Open Forms.
  2. Type DEE and select OK.
  3. Enter a description to match the organizational expenses and select Finish.
  4. Select Line 15a or the business acitity and Select Finish.
  5. Enter the dates to begin the amortization deductions.
  6. For Cost or other basis, enter the amount of the expenses that are to be amortized.
  7. For Type of asset, select code L.
  8. Scroll down to the line IRC section under which intangible asset cost is amortized and enter 195.
  9. Scroll down to the Recovery period and enter the number of years to amortize expenditures.

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