IRS Agrees to Affirmative Elections for Business Start-Up Costs

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IRS and Treasury agree with a commenter's recommendation to clarify what is meant by “clearly electing to capitalize” elections to deduct start-up expenditures, corporation organizational expenditures, and expenses of partnerships, the service says in issuing final rules (T.D. 9542). The rules say a taxpayer that wants to make an election to capitalize start-up and organizational costs must “affirmatively elect to capitalize” the costs on a tax return. The issue raised by the proposed rules (REG-164965-04) was whether a taxpayer that unintentionally does not deduct or amortize start-up and organizational costs could be considered to have “clearly elected to capitalize them.”