Care should be taken to differentiate offering costs and organization costs. See the chart in AAG-INV 8.26 for definitions and examples of offering costs and organization costs. ASC 720-15-25-1 states that organization costs should be charged to expense as they are incurred. Offering costs incurred during the initial offering period of closed-end fund common stock should be charged to capital in the same manner as offering costs incurred by commercial entities.

ASC 946-20-25-5 states that offering costs of closed-end funds and investment partnerships should be charged to paid-in capital upon the sale of shares or units. ASC 946-20-25-6 states that offering costs of open-end investment companies and closed-end funds with a continuous offering period should be treated as a deferred charge. Industry practice is to defer until operations begin and thereafter amortized to expense over 12 months on a straight-line basis, which is consistent with guidance in the Audit Guide.

Section TIS 6910.23 has clarified that, similar to registered investment companies, a limited partnership that continually offers its interest should defer offering costs and amortize them to expense over 12 months on a straight line basis. If the offering period terminates earlier than expected, the remaining deferred balance should be charged to expense. An investment partnership is deemed to continually offer its interests if an eligible, new investor may enter into an agreement to purchase an interest in the partnership on any business day or on a series of specified business days over a continuous period of time. A new investor is one that does not already own any interest in the investment partnership at the time of purchase.

Some investment partnerships may offer their interests at a single point in time and require new investors to commit to providing capital contributions over a period of time. As interests are not available for purchase over a continuous period, such investment partnerships would not be deemed to have a continuous offering period.