Startup Costs Deduction
Definition
A US provision letting a new business deduct a limited amount of qualifying startup and organisational costs in its first year, amortising the remainder over a set period.
Related Terms in US Tax
Accountable Plan
A US employee expense-reimbursement arrangement that meets IRS rules so reimbursements are not treated as taxable wages. It requires a business connection, substantiation and return of any excess.
Net Operating Loss (NOL)
A US tax loss arising when deductible expenses exceed taxable income. NOLs can generally be carried forward to offset future taxable income, subject to limitations that have changed over time.
Capital Loss Carryover
A US provision allowing capital losses that exceed the amount deductible in a year to be carried forward to offset capital gains and limited ordinary income in later years.
Reasonable Compensation (S-Corp)
The IRS requirement that an S-corporation owner-employee be paid a reasonable salary for their work before taking profit distributions, preventing avoidance of payroll taxes by underpaying wages.
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