How to Correctly Add Startup Expenses in ProSeries

[troy]

Company X is in the startup phase, paying rent and legal fees before operations commence.

I've read a few posts, and it sounds like the election must be made in ProSeries under IRC 248, and the expenses must be added on that tab.

However, it also looks like the expenses need to be added again on the "Other Expenses" section of the return.

Can someone confirm?

[Just-Lisa-Now-]

Once the business is operating, you can deduct start up expenses that were incurred prior to the business being open

https://www.irs.gov/publications/p583#en_US_202501_publink1000253143

[troy]

You are allowed the $5k of deductions, and I am trying to determine how to properly enter in ProSeries

[sjrcpa]

Only once they have actually started operating the business. Prior to that, everything is capitalized on the Balance Sheet.

[troy]

ok how to enter in the first year? I am referencing below:

https://accountants.intuit.com/support/en-us/help-article/form-1040/amortization-organizational-expe...

[TaxGuyBill]

Startup Expenses are Section 195.  No separate election form is required.

Just enter the up-to-$5000 as an other expense and call it Startup Expenses.  If there there are additional expenses, open an Asset Entry Worksheet and Amortize those expenses under Section 195.

[troy]

Can you help me understand the difference between what this is?

https://accountants.intuit.com/support/en-us/help-article/form-1040/amortization-organizational-expe...

[sjrcpa]

Organizational expenses are those incurred to form the legal entity - legal and filing fees.

[troy]

Thanks, but that article makes it seem like there is an election.

Not saying your wrong, just trying to understand.

[troy]

It looks like there is indeed an election screen for it on the elections checklist.

[TaxGuyBill]

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@troy wrote:

Thanks, but that article makes it seem like there is an election.

Not saying your wrong, just trying to understand.

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The problem is that you are reading an Intuit article, rather than an article from someone that actually knows what to do.  An election hasn't been required in 14 years (maybe more).  A lot of information from Intuit is rather useless and/or outdated.

"For business startup and organizational costs paid or incurred after September 8, 2008, you can elect to deduct a limited amount of startup or organizational costs for the year that your business begins. You are not required to attach a statement to make this election. Once made, the election is irrevocable. Any cost not deducted currently must be amortized ratably over a 180-month period."

https://www.irs.gov/instructions/i4562#en_US_2024_publink1000309380

"a taxpayer is not required to make a separate election statement to deduct startup costs. Such an election is deemed to be automatically"

https://www.thetaxadviser.com/issues/2017/sep/deducting-startup-expansion-costs/

https://www.law.cornell.edu/cfr/text/26/1.195-1