# 26 U.S.C. § 248: Organizational expenditures

Source: OLRC release point 119-134 <https://uscode.house.gov/us/usc/119-134/t26/s248>. Cite pinpoints as 26 U.S.C. § 248(a)(1).

## § 248(a) Election to deduct

If a corporation elects the application of this subsection (in accordance with regulations prescribed by the Secretary) with respect to any organizational expenditures—

**§ 248(a)(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—

**§ 248(a)(1)(A)** the amount of organizational expenditures with respect to the taxpayer, or

**§ 248(a)(1)(B)** $5,000, reduced (but not below zero) by the amount by which such organizational expenditures exceed $50,000, and

**§ 248(a)(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.

## § 248(b) Organizational expenditures defined

The term “organizational expenditures” means any expenditure which—

**§ 248(b)(1)** is incident to the creation of the corporation;

**§ 248(b)(2)** is chargeable to capital account; and

**§ 248(b)(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.

## § 248(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.

## Regulations

- [Treas. Reg. § 1.248-1](/26/reg/1.248-1.md): Election to amortize organizational expenditures. (interprets § 248)

## Final rules

- [76 FR 50887](https://www.federalregister.gov/documents/2011/08/17/2011-20872/elections-regarding-start-up-expenditures-corporation-organizational-expenditures-and-partnership) (2011): Elections Regarding Start-Up Expenditures, Corporation Organizational Expenditures, and Partnership Organizational Expenses
- [73 FR 38910](https://www.federalregister.gov/documents/2008/07/08/E8-15459/elections-regarding-start-up-expenditures-corporation-organizational-expenditures-and-partnership) (2008): Elections Regarding Start-up Expenditures, Corporation Organizational Expenditures, and Partnership Organizational Expenses

## Leading cases

- [Warsaw Photographic Assocs. v. Commissioner, 84 T.C. 21 (1985)](https://www.courtlistener.com/opinion/4706090/warsaw-photographic-associates-inc-v-commissioner/)
- [General Bancshares Corp. v. Commissioner, 39 T.C. 423 (1962)](https://www.courtlistener.com/opinion/4701227/general-bancshares-corp-v-commissioner/)
- [Farmers Grain Marketing Terminal v. United States, 434 F. Supp. 368 (N.D. Miss. 1977)](https://www.courtlistener.com/opinion/1416890/farmers-grain-marketing-terminal-aal-v-united-states/)

## Connections

Cites: none

Cited by: § 170 Charitable, etc., contributions and gifts; § 535 Accumulated taxable income; § 545 Undistributed personal holding company income; § 834 Determination of taxable investment income; § 852 Taxation of regulated investment companies and their shareholders; § 857 Taxation of real estate investment trusts and their beneficiaries; § 1363 Effect of election on corporation; § 1375 Tax imposed when passive investment income of corporation having accumulated earnings and profits exceeds 25 percent of gross receipts

## Amendments

- 1954-08-16: [Act Aug. 16, 1954, ch. 736](/26/act/1954-ch736.md), 68A Stat. 76
- 1976-10-04: [Pub. L. 94-455](/26/act/94-455.md), 90 Stat. 1770
- 2004-10-22: [Pub. L. 108-357](/26/act/108-357.md), 118 Stat. 1651
- 2014-12-19: [Pub. L. 113-295](/26/act/113-295.md), 128 Stat. 4044