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Bill Spohn, a lawyer in the same building in West Vancouver, has
sent his opinion in here.
-----Original Message-----
From: [email protected] [mailto:[email protected]]
Sent: Friday, December 12, 2003 7:00 AM
To: [email protected]
Subject: Re: Deducting Professional Fees involved in
Purchasing a business.
In a message dated 12/12/2003 1:47:26 AM Pacific Standard Time,
[email protected] writes:
To give another example. If you paid the lawyer $1,000 to
incorporate the company, it is not deductible. It goes on the
Balance sheet as an asset under Incorporation expense.
David - I always break my bill for incorporating a company into
two parts - pre and post incorporation. I tell the client that if
I don't do that, the whole thing will be capitalised and can't be
deducted as a business expense (correct me if I am wrong).
BTW, the bill for incorporation is normally around $950
(depending on how many names needed searching, and whether or not
they need it on a 'rush' basis), of which $400 is fees (broken
into $200 pre and $200 post), the rest being disbursements and
taxes.
What part of that mix would be deductable, and what part must be
depreciated?
Bill
----==============
david ingram replies:
No part of the incorporation is depreciated or written off in any
manner that I know of other than as an Allowable Business loss
for the shareholder if the business goes under. It simply stays
on the Balance sheet as an asset of the corporation. You could
compare it to land which also sits on the balance sheet as an
asset and is not depreciable in any manner.
Legal advice for the preparation of business contracts,
collection of money, and other types of operating expenses are
deductible for the corporation or business.
Leases: The preparation of the company's lease for it's own
premises must be amortized over the life of the lease as are the
leasehold improvements.
I am not sure what the $200 "post-incorporation" fee is for. It
would still not be deductible if it involved the corporation as a
whole and had nothing to do with the actual ongoing day to day
operations of the business.
Does any one else (Peter McLaren CGA maybe) have a comment here?
I
.
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