Incorporation Expenses

If you decide to do business as a corporation, you can have your corporation elect to deduct its organization expenditures over a period of at least 60 months. If this election is not made, the expenditures must be capitalized and will not be recovered until the corporation is liquidated.


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If your corporation is a success and you want to pass it on to future generations, you'll want to make sure to take advantage of this election. If you don't, as a practical matter, your corporation may never get to deduct its corporate organizational costs.

If the corporation makes this election, the expenditures incurred before the end of its first tax year (whether or not paid in that year) may be allowed as a deduction to be taken in equal installments over the period elected.

Requirements. Which types of expenditures should you include? You can include expenses that meet the following three conditions:

Examples of expenditures that can be deducted include:

What can't be deducted. Examples of nondeductible expenditures include costs of issuing shares of stock, such as commissions, professional fees, and printing costs.