Question

A sole proprietorship that began business's May 1, 2018, incurred $9000 of startup expenses. If the business elects to report the maximum of startup costs as a current expense, what is the amortization amount reported as an "other expense" on schedule C?

A. $88

B. $134

C. $178

D. $266

Answer 1

Option (C) $178

Step-by-step explanation:

Data provided in the question:

Startup expense incurred by the business = $9,000

Now,

The start-up costs and organizational expenses are deducted over a time period of 180 months

also,

$5,000 can be deducted in the first year by the startup expense.

Therefore,

Amortization amount reported as a "other expense" on Schedule C per month

= [ Startup expense - $5,000 ] ÷ 180

= [ $9,000 - $5,000 ] ÷180 = $22.22

for the year = $22.22 × Number of months left in the year from May

= $22.22 × 8

= 177.78 ≈ $178

Hence,

Option (C) $178