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election. See sec. 1.195-1(b), Income Tax Regs. A taxpayer
makes an election by attaching a statement (election statement)
to his or her tax return, which must be filed no later than the
date prescribed for filing the return, including extensions, for
the taxable year in which the active trade or business begins.14
Sec. 195(d); sec. 1.195-1(b), Income Tax Regs. The election
statement must provide the following information:
The statement shall set forth a description of the
trade or business to which it relates with sufficient
detail so that expenses relating to the trade or
business can be identified properly for the taxable
year in which the statement is filed and for all future
taxable years to which it relates. The statement also
shall include the number of months (not less than 60)
over which the expenditures are to be amortized, and to
the extent known at the time the statement is filed, a
description of each start-up expenditure incurred
(whether or not paid) and the month in which the active
trade or business began (or was acquired). * * *
[Sec. 1.195-1(c), Income Tax Regs.]
Once effective, the election applies to all startup
expenditures related to the active trade or business and is
irrevocable. Sec. 1.195-1(a), Income Tax Regs. A taxpayer may
file a revised statement that includes any startup expenditures
not included in the original statement. Sec. 1.195-1(c), Income
Tax Regs.
14The election statement may be attached to, and filed with,
a tax return for a taxable year preceding the taxable year in
which the taxpayer’s trade or business becomes active. Sec.
1.195-1(b), Income Tax Regs. The election does not become
effective until the first month in which the taxpayer’s trade or
business becomes active. Id.
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Last modified: March 27, 2008