Note: A formal election statement input was removed from 2008 program per Per T.D. 9411, a formal election is not needed. The election is deemed by taking the expense on the return according to the instructions for the return.

  IRC Sec. 248(a) governs the deduction and amortization of Organizational Costs for C and S Corporation Returns.

  There are two steps to inputting Organizational Costs: 

  Step 1:  

1. Go to the Income/Deduction > Business worksheet.
2. In section 10 - Other Deductions (1120S) or section 11 - Other Deductions (1120).
3. Line 4 - Other Deductions input Organizational Costs with description “Organizational Costs Expensed Under IRC Sec. 248(a)” and total amount to be expensed.
    

Step 2:

1. Go to the Income/Deduction > Business worksheet.
2. In section 7 - Depreciation and Amortization (1120S) or section 8 - Depreciation and Amortization (1120). 
3. Select Detail.
4. Input organizational costs that are to be amortized in the current year:
• Line 1 - Description input Organizational Costs elected to be amortized.
• Line 4 - Date in Service input the date that the business started.
• Line 5 - Method input an A.
• Line 6 - Life/Rate input a life (assets with a method of A use Months not Years to determine life.
• Line 7 - Cost/other Basis input the remaining balance of costs.

Note: This option will flow current year expense directly to "Other deductions" line 26.

Caution:  Start-up costs IRC 195(b) are not the same as Organizational costs which are covered under IRC Sec. 248(a) for 1120/1120S and IRC Sec. 709(b) for 1040/1065.