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Title 26 — Internal Revenue CodeRelease 119-73

§248 Organizational Expenditures

Title 26 › Subtitle Subtitle A— Income Taxes › Chapter 1— NORMAL TAXES AND SURTAXES › Subchapter B— Computation of Taxable Income › Part VIII— SPECIAL DEDUCTIONS FOR CORPORATIONS › § 248

Last updated Apr 6, 2026|Official source

Summary

A corporation can choose to deduct up to $5,000 of its organizational costs in the year it starts doing business. That $5,000 shrinks dollar for dollar once total organizational costs pass $50,000. Whatever is not deducted right away is written off evenly over 180 months starting with the month the business begins. Organizational costs are expenses tied to creating the corporation that go to its capital account. The election must be made by the deadline for filing the return for that year, including extensions, and it sticks for all later years.

Full Legal Text

Title 26, §248

Internal Revenue Code — Source: USLM XML via OLRC

(a)If 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)The 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)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.

Legislative History

Notes & Related Subsidiaries

Editorial Notes

Amendments

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 Subsidiaries

Effective Date

of 2014 AmendmentAmendment 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 AmendmentAmendment 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 AmendmentAmendment 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.

Reference

Citations & Metadata

Citation

26 U.S.C. § 248

Title 26 — Internal Revenue Code

Last Updated

Apr 6, 2026

Release point: 119-73