Start up cost

[helow]

Where do you deduct start up costs.

Thanks

Jeff

[BulldogTom]

Are you asking about a schedule C? Are you taking the §195 election to expense in the first year of business?

Tom

Lodi, CA

[helow]

TP has started an LLC for his trucking business. He did not make any money but wants to claim startup cose and licenses. All of his expenses are less than $4K. I think he can either amortize them over 60 month or deduct up to $5K. I just want to make sure that he can claim these expenses even though he had zero sales. The truck is idle in garage!

My other question is that: does he have to file form 1065. That is what the IRS said to him when he received the EIN.

Thanks

Jeff

[indyscott]

Up to $5000 of startup costs can be expensed by making an election on PT VI of 4562, and attaching a separate statement detailing the costs. It is to be done in the year that the business activity begins. Sounds to me like the business hasn't begun, and s/not deduct those $ in 07.

The return to file is Sch C on 1040. A single member LLC is a "disregarded entity" by IRS.

[BulldogTom]

I agree with Indyscott that the taxpayer should not deduct in 07. No business activity looks like business not started yet. Take them in the year he starts business.

Look at his LLC election. He should have checked the box to be disregarded if he is the sole member of the LLC.

Tom

Lodi, CA

[helow]

Thanks all. I appreciate your responses.

Jeff

[OldJack]

>>Take them in the year he starts business.<<

True, but take them starting in the month that he starts business.

[diligentbiz]

I amortize and it's never been questioned. (Schedule E people - Expenses to search for new real estate property for rentals can also be amortized.)