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3 Replies Last post: Mar 17, 2008 1:39 PM by dublincpa

Can I Deduct Business Costs from 2007 on a 2008 Tax Return?

Mar 13, 2008 10:28 AM

Consultant442 4 posts since
Mar 13, 2008

I started a consulting business on January 7, 2008. I bought 2 plane tickets and incurred travel expenses in 2007 when trying to set up the consulting contract for 2008. I also incurred moving costs at the end of 2007 associated with moving out of state to start my new business. The total business start-up costs were around $5000. I didn't earn any money with the new business in 2007. I also did not register the new company as an LLC until until 2008.

1. Can I deduct the moving costs, travel expenses and other business start-up expenses from 2007 on my 2008 return?

2. If I have to show them on my 2007 return, will this trigger an audit because my business did not make any money in 2007?

Thank you!

Tags: deduction, moving, travel Report as inappropriate

LUCKIEST 7,935 posts since
Aug 6, 2007

1. Re: Can I Deduct Business Costs from 2007 on a 2008 Tax Return? Mar 13, 2008 11:06 AM

442, You started a consulting business on January of 2008.
Usually you have income and expenses in the same year.
I think that you can "capitalize" Business Costs from 2007 and
then deduct them in 2008 when you have income.
Every person in business should have an Account, A Lawyer and
maybe an Insurance Broker.
Another suggestion. Try "Dublin" He is an accountant, among others
on this web site who gives good answers.
LUCKIEST

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dublincpa 165 posts since
Jan 29, 2008

2. Re: Can I Deduct Business Costs from 2007 on a 2008 Tax Return? Mar 13, 2008 11:36 AM

As long as your total startup costs don't exceed $50K, you can deduct up to $5000 is startup costs in the year you start business. The amount above $5000 gets amortized over 60 months (deduction is spread into 60 equal monthly amounts that will cover several tax years). Between $50K-$55K, the $5000 immediate deduction phases out. After that, you have to amortize everything over 60 months.

Thanks for the plug LUCKIEST.

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dublincpa 165 posts since
Jan 29, 2008

3. Re: Can I Deduct Business Costs from 2007 on a 2008 Tax Return? Mar 17, 2008 1:39 PM

in response to: dublincpa

Correction. I realized that I goofed on my prior post. The amorization period is 180 months for Section 195 startup costs incurred after 10/22/04. I mistakenly quoted the old rule of 60 months.

I apologize for the inconvenience. I have to remember to start putting a disclaimer in these posts.

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ForumsTaxes and Payroll

This Question is Possibly Answered

Can I Deduct Business Costs from 2007 on a 2008 Tax Return?

Mar 13, 2008 10:28 AM

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