Answer:
1) She incurred start-up costs of $2,500.
a) Amount of start up costs immediately expensed?
$2,500, computed as follows:
1 Maximum immediate expense 5000 S 195(b)(1)(ii)
2 Total start-up costs 2500 Given In
problem
3 Phase-out threshold 50000 S 195(b)(1)(ii)
4 Immediate expense phase-out 0 (2-3)
Allowable immediate expense 2500 Lessor of (2)or-(1)-(4)
______________
2) She incurred start-up costs of $41,000
a) Amount of start up cost immediately expensed
$5000, computed as follows:
1 Maximum immediate expense 5000 S 195(b)(1)(ii)
2 Total start-up costs 41000 Given In
problem
3 Phase-out threshold 50000 S 195(b)(1)(ii)
4 Immediate expense phase-out 0 (2-3)
Allowable immediate expense 5000 Lessor of (2)or-(1)-(4)
3) She incurred start-up costs of $51,100.
a) Amount of start up cost immediately expensed
$3900, computed as follows:
1 Maximum immediate expense 5000 S 195(b)(1)(ii)
2 Total start-up costs 51100 Given In
problem
3 Phase-out threshold 50000 S 195(b)(1)(ii)
4 Immediate expense phase-out 1100 (2-3)
Allowable immediate expense 3900 Lessor of (2)or-(1)-(4)
4) She incurred start-up costs of $61,250.(Leave no answer blank. Enter zero if applicable.)
$0, computed as follows:
1 Maximum immediate expense 5000 S 195(b)(1)(ii)
2 Total start-up costs 61250 Given In
problem
3 Phase-out threshold 50000 S 195(b)(1)(ii)
4 Immediate expense phase-out 11250 (2-3)
Allowable immediate expense 0 Lessor of (2)or-(1)-(4)
5) How would you answer parts (a) through (d) if she formed a partnership or a corporation and she incurred the same amount of organizational expenditures rather than start-up costs (how much of the organizational expenditures would be immediately deductible)?
Answer:
The answers would be the same if these were organizational expenditures instead ofstart-up costs.Note, however, that organizational expenditures only apply tocorporations and partnerships and do not apply to businesses organized as soleproprietorships
Explanation:
Hope you got it :)
