Please sign in to post in this forum.

ForumsFinancing Tips

Up to All Forums

This Question is Possibly Answered

1 "correct" answer available (5 pts) 3 "helpful" answers available (4 pts)
Post a new topic
11 Replies Last post: Sep 19, 2008 4:10 PM by fritzmaster

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

Mar 13, 2008 10:28 AM

Click to view Consultant442's profile Professional 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: start-up, loans Report as inappropriate
Click to view LUCKIEST's profile SCORE 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
in response to: Consultant442
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
Report as inappropriate
Click to view dublincpa's profile Mogul 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
in response to: Consultant442
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.
Report as inappropriate
Click to view dublincpa's profile Mogul 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.
Report as inappropriate

More Like This

Legend

  • Open Question
  • Answered Question
  • New content since your last visit
  • Updated content since your last visit
  • Content you have read