26 U.S.C. § 248

Organizational expenditures

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(a) Election to deductIf a corporation elects the application of this subsection (in accordance with regulations prescribed by the Secretary) with respect to any organizational expenditures—(1) the corporation shall be allowed a deduction for the taxable year in which the corporation begins business in an amount equal to the lesser of—(A) the amount of organizational expenditures with respect to the taxpayer, or(B) $5,000, reduced (but not below zero) by the amount by which such organizational expenditures exceed $50,000, and(2) the remainder of such organizational expenditures shall be allowed as a deduction ratably over the 180-month period beginning with the month in which the corporation begins business.(b) Organizational expenditures definedThe term “organizational expenditures” means any expenditure which—(1) is incident to the creation of the corporation;(2) is chargeable to capital account; and(3) is of a character which, if expended incident to the creation of a corporation having a limited life, would be amortizable over such life.(c) Time for and scope of election

The election provided by subsection (a) may be made for any taxable year but only if made not later than the time prescribed by law for filing the return for such taxable year (including extensions thereof). The period so elected shall be adhered to in computing the taxable income of the corporation for the taxable year for which the election is made and all subsequent taxable years.

(Aug. 16, 1954, ch. 736, 68A Stat. 76; Pub. L. 94–455, title XIX, §§ 1901(a)(36), 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1770, 1834; Pub. L. 108–357, title VIII, § 902(b), Oct. 22, 2004, 118 Stat. 1651; Pub. L. 113–295, div. A, title II, § 221(a)(42), Dec. 19, 2014, 128 Stat. 4044.)Editorial NotesAmendments

2014—Subsec. (c). Pub. L. 113–295 struck out “beginning after December 31, 1953,” after “any taxable year” and “The election shall apply only with respect to expenditures paid or incurred on or after August 16, 1954.” at end.

2004—Subsec. (a). Pub. L. 108–357 amended heading and text of subsec. (a) generally. Prior to amendment, text read as follows: “The organizational expenditures of a corporation may, at the election of the corporation (made in accordance with regulations prescribed by the Secretary, be treated as deferred expenses. In computing taxable income, such deferred expenses shall be allowed as a deduction ratably over such period of not less than 60 months as may be selected by the corporation (beginning with the month in which the corporation begins business).”

1976—Subsec. (a). Pub. L. 94–455, § 1906(b)(13)(A), struck out “or his delegate” after “Secretary”.

Subsec. (c). Pub. L. 94–455, § 1901(a)(36), substituted “August 16, 1954” for “the date of enactment of this title”.

Statutory Notes and Related SubsidiariesEffective Date of 2014 Amendment

Amendment by Pub. L. 113–295 effective Dec. 19, 2014, subject to a savings provision, see section 221(b) of Pub. L. 113–295, set out as a note under section 1 of this title.

Effective Date of 2004 Amendment

Amendment by Pub. L. 108–357 applicable to amounts paid or incurred after Oct. 22, 2004, see section 902(d) of Pub. L. 108–357, set out as a note under section 195 of this title.

Effective Date of 1976 Amendment

Amendment by section 1901(a)(36) of Pub. L. 94–455 effective for taxable years beginning after Dec. 31, 1976, see section 1901(d) of Pub. L. 94–455, set out as a note under section 2 of this title.

Amendment by section 1906(b)(13)(A) of Pub. L. 94–455 effective Feb. 1, 1977, see section 1906(d)(1) of Pub. L. 94–455, set out as a note under section 6013 of this title.

Notes of Decisions

Cited in 4 cases, 1962–1981 · leading case: Farmers Grain Marketing Terminal (AAL) v. United States

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Farmers Grain Marketing Terminal (AAL) v. United States (1977) msnd · cites it 3× “In its initial return for the fiscal year ended July 31, 1969, plaintiff properly elected, pursuant to 26 U.S.C. § 248 , to amortize organizational expenditures for the minimum period of 60 months (5 years) permitted by statute.”

McCrory Corporation v. United States (1981) ca2 · cites it 2× “§ 248, 26 U.S.C. § 248 , however, affords a corporation the option to elect to treat its organization expenditures as deferred expenses and deduct them ratably over the corporation’s first five years or longer of business operations.”

Gravois Planing Mill Company, Charles A. And Florence Beckemeier v. Commissioner of Internal Revenue (1962) ca8 “Compare, however, § 248 of the 1954 Code, 26 U.S.C.A. § 248 . The theory usually expressed to support this conclusion is that expenditures of this kind have to do with a continuing capital asset.”

Canal-Randolph Corporation v. United States (1977) ca7 “Section 248 permits a corporation to treat its post-1954 organizational expenditures as deferred expenses and allows such deferred expenses to be deducted from taxable income “ratably” over a period of five or more years ( 26 U.S.C. § 248 ). 4 . Section 165(a) allows as a…”

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