Do I need to file a 2017 business return? Paid $40k franchise fee and formed partnership LLC but did not open, $0 revenue. Claim start up cost in the year business opens?

[jtchesak]

Assuming TOTAL start up costs remain under $55k, are they then claimed and amortized in the year the business is officially opened?  If the total startup costs exceed $55k, are they no longer eligble?

[CathiM · Accepted solution]

Yes, according to the IRS, you elect to deduct the start-up or organizational costs by claiming the deduction on your income tax return for the tax year in which the active trade or business begins. You are not required to attach a statement to your return to elect to deduct such costs.  

If the startup costs exceed $55,000, you can still amortize them over 15 years, but you can't take the election to deduct the $5,000  the first year.  

You can elect to deduct up to $5,000 of business start-up and $5,000 of organizational costs paid. The $5,000 deduction is reduced by the amount your total start-up or organizational costs exceed $50,000. Any remaining costs must be amortized.

A domestic partnership must file an information return, unless it neither receives gross income nor pays or incurs any amount treated as a deduction or credit for federal tax purposes.  If this fits your situation, you do not have to file a return for 2017, since you are not treating the start up costs as a deduction in 2017.

Here is some more information:

https://ttlc.intuit.com/replies/5146525

[jtchesak]

OUTSTANDING REPLY!  Thank you so much for the clarification!