Question

[The following information applies to the questions displayed below.] Juliette formed a new business to sell sporting goods this year. The business opened its doors to customers on June 1. Determine the amount of start-up costs Juliette can immediately expense (not including the portion of the expenditures that are amortized over 180 months) this year in the following alternative scenarios: (Leave no answer blank. Enter zero if applicable.) 3.value: 10.00 pointsRequired information a. She incurred start-up costs of $3,900. HintsReferenceseBook & Resources Hint #1 Check my work 4.value: 10.00 pointsRequired information b. She incurred start-up costs of $44,500. HintsReferenceseBook & Resources Hint #1 Check my work 5.value: 10.00 pointsRequired information c. She incurred start-up costs of $53,200. HintsReferenceseBook & Resources Hint #1 Check my work 6.value: 10.00 pointsRequired information d. She incurred start-up costs of $64,750. HintsReferenceseBook & Resources Hint #1 Check my work 7.value: 10.00 pointsRequired information e. 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)? HintsReferenceseBook & Resources Hint #1 Check my work

Answer 1

Ans a
Start up cost
	Amt
Maximum immediate expense A (195(b)(1)(ii)	$5,000
Start up cost B	$3,900
Phase out threshold c (as per sec 195(b)(1)(ii)	$50,000
Immediate expense phase out D= (B-C)	$0
Immediate expense allowable (lesser of B or (A-D))	$3,900
ans Immediate expense allowable	$3,900
ans b
Start up cost
	Amt
Maximum immediate expense A (195(b)(1)(ii)	$5,000
Start up cost B	$44,500
Phase out threshold c (as per sec 195(b)(1)(ii)	$50,000
Immediate expense phase out D= (B-C)	$0
Immediate expense allowable (lesser of B or (A-D))	$5,000
ans Immediate expense allowable	$5,000
ans c
Start up cost
	Amt
Maximum immediate expense A (195(b)(1)(ii)	$5,000
Start up cost B	$53,200
Phase out threshold c (as per sec 195(b)(1)(ii)	$50,000
Immediate expense phase out D= (B-C)	$3,200
Immediate expense allowable (lesser of B or (A-D))	$1,800
ans Immediate expense allowable	$1,800
ans d
Start up cost
	Amt
Maximum immediate expense A (195(b)(1)(ii)	$5,000
Start up cost B	$64,750
Phase out threshold c (as per sec 195(b)(1)(ii)	$50,000
Immediate expense phase out D= (B-C)	$14,750
Immediate expense allowable (lesser of B or (A-D))	$0
ans Immediate expense allowable	$0
ans e
Answers would be same in case instead of start up cost these were organizational expenses. Also organization expenses apply tp partnerships and corporation and do not apply to sole propritorship.

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