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How to Take the Deductions. The IRS allows you to deduct $5,000 in business startup costs and $5,000 in organizational costs, but only if your total startup costs are $50,000 or less.If your startup costs for either area exceed $50,000, the amount of your allowable deduction will be reduced by that dollar amount.ow to Take the Deductions. The IRS allows you to deduct $5,000 in business startup costs and $5,000 in organizational costs, but only if your total startup costs are $50,000 or less.
The next requirement of section 162(a) is that the taxpayer must be carrying on a trade or business. Start up expenses are not entirely deductible, but must be spread out over 15 years. Because business expenses are fully deductible under section 162, taxpayers try to argue that expenses were not start up expenses.