Organization costs and start-up costs amortized over 15 years.

• Author: Rohrs, Jane

At the election of the taxpayer, start-up expenditures and organizational expenditures may be amortized over a period of not less than 60 months, beginning with the month in which the trade or business begins. Regulations require a taxpayer to file an election to amortize start-up expenditures no later than the due date for the tax year in which the trade or business begins. Further, Sec. 197 requires most acquired intangible assets (e.g., goodwill, trademarks, franchises and patents) held in connection with the conduct of a trade or business or an activity for the production of income, to be amortized over 15 years, beginning with the month in which the intangible was acquired.

New Law

AJCA Section 902 modifies Secs. 195's, 248's and 709's treatment of start-up and organizational expenditures. A taxpayer can elect to deduct up to $5,000 of start-up and $5,000 of organizational expenditures in the tax year in which the trade or business begins. Each $5,000, however, is reduced (but not below zero) by the amount by which the cumulative cost of start-up or organizational expenditures exceeds $50,000. Start-up and organizational expenditures not deductible in the year in which the trade or business begins are amortized over a 15-year period consistent with the amortization period for...