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Start Up Costs – Costs Of Organizing A Corporation

CorporationThe costs of organizing a corporation are direct costs of creating the corporation. Clients can amortize an organizational cost only if it meets all of the following requirements:

  • It is for the creation of the corporation;
  • It is chargeable to a capital account;
  • The client could amortize the cost over the life of the corporation if the corporation has fixed life.

Clients must have incurred the cost before the end of the first tax year in which the corporation was in business. A corporation using the cash method of accounting can amortize organizational costs incurred within the first tax year, even if it does not pay them that year.

The following are types of organizational costs:

  • The cost of legal services (such as drafting the charter, bylaws, terms of the original stock certificates, and minutes of organizational meetings)
  • Costs of temporary directors
  • The cost of organizational meetings
  • State incorporation fees
  • Accounting services for setting up the corporation.

COST THAT CANNOT BE AMORTIZED

The following costs are not organizational costs and must be capitalized:

Costs for issuing and selling stocks and securities, such as commissions, professional fees, and printing costs; or costs associated with transfer of assets to the corporation.


If you have any questions or require further info please call 718-531-1105 or send an email.


This web site and these articles are not tax or legal advice and are not intended as tax or legal advice.  They are intended to provide only general, non-specific legal information and are not intended to cover all the issues related to the topic discussed.  The specific facts that apply to your matter may make the outcome different than would be anticipated by you.  This web site and these articles are based on United States law.  You should consult with an accountant or lawyer familiar with the issues. This web site and the articles contained on this web site are not solicitations.

Contact Info:

Ronald Semaria
Semaria Consulting
1408 East 66th St
Brooklyn, NY 11234
Email: info@semaria.com

Phone Numbers:

Phone: 718-531-1105
Toll-Free: 866-531-1105
Toll-Free: 888-IRSAUDIT
Toll-Free: 888-RONTAXES
Fax: 718-444-7152

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