1040-US: Entering start-up expenses

Alerts and notices
Leave feedback

Internal Employees: Submit feedback

Contact information (optional):

Leave this blank:

Please tell us how we can make this information more helpful.


Characters left:

MFA required for electronic filing

Effective May 3rd, the 2017 version of UltraTax CS requires multi-factor authentication (MFA) to transmit e-files from CS Connect. Find out more.

Question

What is the correct procedure for entering start-up expenses paid in connection with a new trade or business?

Answer

  1. Click the Asset tab in the Business or Farm folder and enter start-up expenses for the trade or business by entering the cost basis of the asset in the asset module.
  2. Click the Method/Life Wizard button in the asset module to open the wizard and select Intangible asset (IRS Code Sec 195). Note that UltraTax CS automatically enters the asset life for start-up expenses under IRC section 195 (15 years).
  3. Enter the amount of deductible expenses in the Start-Up/Org Exp field. If you do not use the Method/Life Wizard when you enter start-up expenses, enter the respective amortization section in the Amortization section field in the Other tab.

Note: If you choose not to use the asset module to enter start-up expenses for the trade or business, enter the asset information, including the amount of expense deduction, in the statement dialog attached to the Amortization detail field in Screen 4562.

The total amount deducted for the start-up expenses will transfer to the other expenses line of Schedule C or F. Any start-up expenses in excess of the amount deducted on Schedule C or F will be amortized over 15 years and reported on Form 4562, Part VI.

Note: Per IRC Regulation 1.195-1, a formal paper election statement to deduct start-up expenses incurred on or after September 7, 2008, is not required.

Related topic: Start-up expense deductions (IRC section 195) FAQ (1040)

Share This