LO.3, 4, 5 The Pelican Partnership was formed on August 1 of the current year and admitted Morlan and Merriman as equal partners on that date. The partners both contributed

$300,000 of cash to establish a children’s clothing store in a local shopping mall. The partners spent August and September buying inventory, equipment, supplies, and advertising for their “Grand Opening” on October 1.

Following are some of the costs the partnership incurred during its first year of operations:

Legal fees to form partnership $10,000 Advertising for “Grand Opening” 25,000 Advertising after opening 10,000 Consulting fees for establishing accounting system 10,000 Rent, five months at $2,000/month 10,000 Utilities at $1,000 per month 5,000 Salaries to salesclerks 50,000 Payments to Morlan and Merriman for services ($6,000/month each for three months, beginning in October) 36,000 Tax return preparation expense 12,000 In addition, the partnership purchased all of the assets of Granny Newcombs, Inc. Of the total purchase price for these assets, $200,000 was allocated to the trade name and logo.
Determine how each of these costs is treated by the partnership, and identify the period over which the costs can be deducted, if any.