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13 February, 03:43

A sole proprietorship that began business's May 1, 2018, incurred $9000 of startup expenses. If the business elects to report the maximum of startup costs as a current expense, what is the amortization amount reported as an "other expense" on schedule C?

A. $88

B. $134

C. $178

D. $266

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Answers (1)
  1. 13 February, 06:09
    0
    Option (C) $178

    Explanation:

    Data provided in the question:

    Startup expense incurred by the business = $9,000

    Now,

    The start-up costs and organizational expenses are deducted over a time period of 180 months

    also,

    $5,000 can be deducted in the first year by the startup expense.

    Therefore,

    Amortization amount reported as a "other expense" on Schedule C per month

    = [ Startup expense - $5,000 ] : 180

    = [ $9,000 - $5,000 ] : 180 = $22.22

    for the year = $22.22 * Number of months left in the year from May

    = $22.22 * 8

    = 177.78 ≈ $178

    Hence,

    Option (C) $178
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