Question

A sole proprietorship that began business may 1, 2016, incurred $9,000 of start-up expenses. if the business elects to report the maximum amount of start-up costs as an current expense, what is the amortization amount reported as a "other expense" on schedule c?

Answer 1

He can claim $5,000 off the top as a current deduction.

The remaining $4,000 must be amortized over the 180-month period, which is a monthly amount of $22.22. Her amortization deduction for the first year would be $177.78 ($22.22 for each of the 8 months he was in business in 2016.)

This amount $177.78 would be reported on Form 4562 for the first year and carried over to his Schedule C.