(a) The organizational expenditures of a corporation may, at the election of the corporation (made in accordance with regulations prescribed by the Franchise Tax Board), be treated as deferred expenses. In computing net income, the deferred expenses remaining, if any, after the application of subdivision (b) shall be allowed as a deduction ratably over that period of not less than 180 months as may be selected by the corporation (beginning with the month in which the corporation begins business).
(b) (1) The corporation shall be allowed a deduction for the deferred expenses under subdivision (a) in an amount equal to the lesser of either of the following:
(A) The amount of organizational expenditures of the taxpayer that are treated as deferred expenses under subdivision (a).
(B) Five thousand dollars ($5,000), reduced, but not below zero, by an amount equal to the excess of the amount of the taxpayer’s organizational expenditures treated as deferred expenses under subdivision (a) over fifty thousand dollars ($50,000).
(2) The deduction under paragraph (1) shall be allowed in the taxable year in which the first month of the period specified in subdivision (a) occurs.
(c) The amendments made to this section by the act adding this subdivision shall apply to amounts paid or incurred on or after January 1, 2005.
(Amended by Stats. 2005, Ch. 691, Sec. 66. Effective October 7, 2005.)
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