Answer:
$3,700
Step-by-step explanation:
The computation of startup expenditure deduction for the current year is shown below:-
According to the section 195, the tax payer is eligible for an immediate deduction of startup expenditure or 5,000 decreased amount that exceeds $50,000
The amount left over of start up expense is eligible for amortization over 180 months starting from the month when the tax payer business started
Immediate deduction = $5,000 - Start up cost in excess of $50,000
= $5,000 - $3,000
= $2,000
The $3,000 come from
= $53,000 - $50,000
= $3,000
now,
Amortized deduction = ((Total start up cost - Immediate deduction) ÷ 180 months) × Total number of months from beginning July to ending December
= (($53,000 - $2,000) ÷ 180) × 6 months
= 283.33 × 6
= $1,700 approx
and
Start up cost = Salary expenses + Travel expenses + Professional fees
= $22,000 + $18,000 + $13,000
= $53,000
finally
Total deduction in the current year = Immediate deduction + Amortized deductions
= $2,000 + $1,700
= $3,700