Oleander Corporation, a calendar year entity, begins business on March 1, 2018. The corporation incurs startup expenditures of $64,000. In your calculations, round any division to 2 decimal places. Round your final answer to the nearest dollar. If Oleander elects § 195 treatment, the total amount of startup expenditures that it may deduct in 2018 is $ ___.

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Business

6 September, 18:30

Oleander Corporation, a calendar year entity, begins business on March 1, 2018. The corporation incurs startup expenditures of $64,000. In your calculations, round any division to 2 decimal places. Round your final answer to the nearest dollar. If Oleander elects § 195 treatment, the total amount of startup expenditures that it may deduct in 2018 is $ ___.

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Mia Nichols · Answer 1

The total amount that Oleander is allowed to deduct using subsection 195 that deals with the start-up expenditures. The amount that qualifies for the computation of tax deductible expenses are those that have been incurred as a startup expenditure.

Furthermore it must be lower of:

(i) the amount of start-up expenditures amortized using the months in the tax year that covers this expenditure (numerator) and using 180 month period (denominator).

(ii) $5,000

Explanation:

So the amount allowable for the expenses is lower of:

$64,000 * 10 months / 180 months = $3556 $5000

So the answer is $3556