- 13 -
expenditure or use must have a high degree of probative value to
elevate such statement” to the level of credibility of a
contemporaneous record. Sec. 1.274-5T(c)(1), Temporary Income
Tax Regs., 50 Fed. Reg. 46016 (Nov. 6, 1985).
C. Startup Expenditures
Pursuant to section 195(a), startup expenditures are not
generally deductible. However, at the election of the taxpayer,
startup expenditures may be treated as deferred expenses and
amortized over at least a 60-month period beginning in the month
in which the active trade or business begins. See sec.
195(b)(1), (c). Section 195(c) provides in part:
The term “startup expenditure” means any amount--
(A) paid or incurred in connection with--
(i) investigating the creation or acquisition
of an active trade or business, or
(ii) creating an active trade or business, or
(iii) any activity engaged in for profit and
for the production of income before the day on which
the active trade or business begins, in anticipation of
such activity becoming an active trade or business, and
(B) which, if paid or incurred in connection with
the operation of an existing active trade or business
(in the same field as the trade or business referred to
in subparagraph (A)), would be allowable as a deduction
for the taxable year in which paid or incurred.
The taxpayer must elect to amortize his or her startup
expenditures. Sec. 195(d). Regulations promulgated under
section 195 provide the time and manner for making such an
Page: Previous 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: March 27, 2008