Pre-Incorporation Expenses

[Joojo]

Hi

How best do we deal with pre-incorporation expenses?

K

 

[Pat A.]

I realize this question is from almost a month ago, but I saw you had no response. This is a slightly complicated question. I need to know more about your business and the transactions themselves, then I can advise you accordingly.

 

[Bad Medicine]

Hi

How best do we deal with pre-incorporation expenses?

K

I don't know anything since I'm totally new to this and not an accountant, so it would be dumb to listen to me.

That said, I think it depends. It's either owner's capital or a loan, usually, so you have to decide which - is the corporation going to pay it back, or not ? Also, it seems to depend on the accounting standard - so for GAAP for example they expect you to account for this as organizational costs (expense). Once upon a time I understand you could depreciate this cost, but since AICPA Statement of Position 98-5 its expensed as it is incurred, which I assume means you can no longer depreciate it.