Prior to initiating operations, every business spends money to develop the idea and create the legal entity. These types of costs are referred to as ‘Organizational Expenses’. There are several different types of organizational expenditures. These include research and development, legal and start-up costs.
Organizing costs include start-up expenditures (Section 195) and organizational costs (Section 248). In general both groups are amortized over a 15 year period after a one-time $5,000 special allowance.