Join the waitlist

Start-Up and Organizational Costs Deduction Calculator (Sections 195 and 248)

What do these figures come to once the work is shown?

First-year deduction of up to $5,000 with the $50,000 phase-out, plus the 180-month amortization of the rest.

  • Runs in your browser
  • Nothing stored or sent
  • Free, no sign-up
Your figures
Example figuresIllustrative only. Type over them with your own.
Total first-year deduction
$11,556
Immediate deduction plus amortization for the months in business
Start-up costs: immediate deduction
$5,000
Start-up costs: amortization this year
$1,439
Drawn to one scale
Total first-year deduction$11,556
Start-up costs: immediate deduction$5,000
Start-up costs: amortization this year$1,439
Organizational costs: immediate deduction$5,000
Organizational costs: amortization this year$117
Left to amortize after year one$38,444
All results
MeasureResult
Total first-year deduction$11,556
Start-up costs: immediate deduction$5,000
Start-up costs: amortization this year$1,439
Organizational costs: immediate deduction$5,000
Organizational costs: amortization this year$117
Left to amortize after year one$38,444
How this was worked out
Work shownrecomputed as you type
Immediate = min(costs, $5,000 - max(0, costs - $50,000))
Monthly amortization = (costs - immediate) / 180
First-year amortization = monthly amount x months in business in the year

Illustrative arithmetic on the figures you enter. Check the result against your firm's methodology before relying on it.

The formulas

  • Immediate = min(costs, $5,000 - max(0, costs - $50,000))
  • Monthly amortization = (costs - immediate) / 180
  • First-year amortization = monthly amount x months in business in the year

How it works

With the election, a taxpayer deducts up to $5,000 of start-up costs in the year the active business begins, reduced dollar for dollar once costs exceed $50,000. The remainder is deducted ratably over 180 months starting with the month the business begins. Section 248 gives a corporation the same $5,000, $50,000 and 180-month rules for organizational expenditures.

The two limits are tested separately. This tool uses section 248 for organizational costs of a corporation only.

Illustrative figures only. Check the result against your firm's methodology before relying on it.

Common questions

When does the business begin?

When it becomes an active trade or business, not when you form the entity. Start-up costs are the costs before that.

What is the $50,000 rule?

The $5,000 amount is reduced dollar for dollar by the amount costs exceed $50,000, and is zero at $55,000.

Which section covers a corporation?

Section 248 for organizational expenditures, with the same $5,000, $50,000 and 180-month figures.

Sources

Runs in your browser. The figures you type are not sent to CORAA or stored. Check the result against your firm's methodology before relying on it.

Related audit calculators

CalculatorSection 197 Intangibles 15-Year Amortization CalculatorMonthly and yearly amortization of goodwill and other section 197 intangibles over 180 months from the month acquired.CalculatorMid-Quarter Convention 40 Percent Test Calculator (Section 168(d))Fourth quarter share of depreciable basis placed in service and whether the mid-quarter convention applies to the year.CalculatorResearch Credit Calculator: Alternative Simplified Credit (Section 41)The 14 percent alternative simplified credit, the 6 percent rate when a prior year has no QREs, and the reduced credit election.
For US CPA firms

Join the CORAA waitlist

CORAA AI drafts audit working papers from your client’s QuickBooks books and does the first pass: lead schedules, tie-out, memos, draft notes and letters. CORAA Network reviewers clear every finding. Your firm reviews and signs.

  • First audit free, so you can judge the quality on a real file
  • Flat fee by entity size; messy books included
  • We work only with CPA firms, never their clients
See how it works →

* required