[needhelpnow]

Basic Partnership, a cash-basis calendar year entity, began business on February 1, 20X5. Basic incurred and paid the following in 20X5:

Filing fees incident to the creation of the partnership 3,600

Accounting fees to prepare the representations in offering materials $12,000

Basic elected to amortize costs. What was the maximum amount that Basic could deduct on the 20X5 partnership return?

a $11,000

b $3,300

c $2,860

d $660

Answer: D – Filing fees of $3,600 qualify as organization expenses, and may be amortized over a period of 60 months, or up to $60 per month. Since the business was started in February, 11 months of amortization, or $660, is permitted. Costs associated with selling partnership interests, such as the production of offering materials, are not organizational expenses, and are not deductible for tax purposes.

My question is, how do you get to decide amortize over 60 months instead of 180? Please help me understand. Thank you!

[leglock]

For Tax purposes, the period allowed for amortization is 180 months. Seems to me this in an error. Becker covers this time period multiple times in their review materials and the period is 180 months, not 60.

[youngd8]

i agree with leglock.. i dont think those answers are correct even though it it true that only filing fees are qualified.

[Author]

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