§248 — Organizational expenditures
32 cases·5 followed·1 distinguished·26 cited—16% support
Statute Text — 26 U.S.C. §248
If a corporation elects the application of this subsection (in accordance with regulations prescribed by the Secretary) with respect to any organizational expenditures—
the corporation shall be allowed a deduction for the taxable year in which the corporation begins business in an amount equal to the lesser of—
the amount of organizational expenditures with respect to the taxpayer, or
$5,000, reduced (but not below zero) by the amount by which such organizational expenditures exceed $50,000, and
the remainder of such organizational expenditures shall be allowed as a deduction ratably over the 180-month period beginning with the month in which the corporation begins business.
The term “organizational expenditures” means any expenditure which—
is incident to the creation of the corporation;
is chargeable to capital account; and
is of a character which, if expended incident to the creation of a corporation having a limited life, would be amortizable over such life.
The election provided by subsection (a) may be made for any taxable year but only if made not later than the time prescribed by law for filing the return for such taxable year (including extensions thereof). The period so elected shall be adhered to in computing the taxable income of the corporation for the taxable year for which the election is made and all subsequent taxable years.
Treasury Regulations
- Treas. Reg. §Treas. Reg. §1.248-1 Election to amortize organizational expenditures
- Treas. Reg. §Treas. Reg. §1.248-1(a) In general.
- Treas. Reg. §Treas. Reg. §1.248-1(b) Organizational expenditures defined.
- Treas. Reg. §Treas. Reg. §1.248-1(c) Time and manner of making election.
- Treas. Reg. §Treas. Reg. §1.248-1(d) Determination of when corporation begins business.
- Treas. Reg. §Treas. Reg. §1.248-1(e) Examples.
- Treas. Reg. §Treas. Reg. §1.248-1(f) Effective/applicability date.
- Treas. Reg. §Treas. Reg. §1.248-1(i) Expenditures connected with issuing or selling shares of stock or other securities, such as commissions, professional fees, and printing costs.
32 Citing Cases
Section 248 permits a corporation to elect to amortize on its corporation income tax return its organizational expenditures over a period of 60 months or more from the month in which the corporation began business. The term “organizational expenditures” is defined to mean any expenditure that is (1) incident to the creation of the corporation; (2)
Vlock's offer to purchase stock of Vlock and Hammond and issued to her a certificate representing the number of shares that she purchased, (6) made an election under section 248 with respect to Vlock and Hammond's organizational expenses , (7) authorized Ms .
Sundrup's offer to purchase stock of Consulting and resolved to issue to him a certificate representing the number of shares that he pur- chasèd, (6) made an electior under section 248 with respect to Consulting's organizational expenses, (7/) authorized Mr.
which requires military installations to purchase cigarettes in Hawaii in a manner'similar to that required of alcoholic beverages under 10 United States Code, section 248.8 (nonappropriated fund instrumentalities, purchase of alcoholic beverages) ; and (2) Excise .tax equal to forty per cent of the wholesale price of each article or item of tobacco products sold by the wholesaler or dealer, whether or not sold at wholesale,..
1)(A) and $392,109 ($456,791 minus $64,682) representing earnings invested in United States property taxable under secs. 951(a)(1)(B) and 956. This result is consistent with sec. 312(n)(3), which denies 5-year amortization of such expenditures under sec. 248 for purposes of determining a corporation’s earnings and profits. Not permitting capital expenditures to reduce earnings and profits is justified on the ground that “capital expenditures accomplish a mere change in the form of assets, and ‘e
20 Although petitioner contends that the expenditures were incurred in 1989, she claims deductions for them in 1990. - 58 - agreement to sell the property, and, further, that she spent substantial sums in preparing the property for sale, she has failed to demonstrate that she is entitled to deduct any of the claimed expenditures in eithe
el the conclusion that petitioners would have us draw. A mortgagor may sell the mortgaged property on terms whereby the purchaser takes subject to the mortgage debt but has no personal obligation to pay it. Osborne, Handbook on the Law of Mortgages, sec. 248 (2d ed. 1970). As stated in Stonecrest Corp. v. Commissioner, 24 T.C. 659, 666 (1955): 5 Petitioners introduced into evidence a notice to foreclose, dated June 24, 1994, and a trustee’s deed of sale dated Nov. 2, 1994. Neither document, howe
* * * (d) Determination of Taxable Income.--For purposes of this section, taxable income of the corporation shall be determined under section 63(a) without regard to-- (1) the deduction allowed by section 172 (relating to net operating loss deduction), and (2) the deductions allowed by part VIII of subchapter B (other than the deduction allowed by section 248, relating to organization expenditures).
— For purposes of this section, taxable income of the corporation shall be determined under section 63(a) without regard to— (1) the deduction allowed by section 172 (relating to net operating loss deduction), and (2) the deductions allowed by part VIII of subchapter B (other than the deduction allowed by section 248, relating to organization expenditures).