Home business

[Joe Horan]

My wife and daughter started a home business and we used our own money to buy the material and equipment needed to make their products. Because of COVID-19 they were only able to do one show in December of 2020. We have over $10,000 of money into the business. Is there somewhere on Turbo Tax that we can claim this lost?

[ColeenD3]

You can include your income and expenses on Schedule C. Assets can be depreciated and start-up costs can be amortized.

Start up costs are those expenses incurred in planning and setting up the business, costs you incur before you open the door.

A portion of startup and organizational costs can be expensed (written off in your first year). The remainder can be amortized (written off over a period of 15 or more years).

Here is how it works:

Expenses paid or incurred after October 22, 2004: 

 - You can deduct up to $5,000 in startup and $5,000 organizational costs as current expenses if the costs are under $50,000, respectively.

 - You can choose to amortize startup and organizational costs greater than $5,000, respectively, (but less than $50,000, respectively) over a period of 15 years.

 - If your startup or your organizational costs are more than $50,000, respectively, the excess amount reduces the amount you can deduct.

[SweetieJean]

@ColeenD3   My wife and daughter started a home business 

Isn't that a Partnership?

[ColeenD3]

Yes, good catch.

[ColeenD3]

The above comments apply to Schedule C. However, as Sweetie Jean noticed, you have a partnership. You wife and daughter need to file Form 1065, Partnership return. You will need the Business program, not Home and Business.

[Rick19744]

STOP.

We do not have sufficient information to be providing accurate responses.

1. We do not know how the entity was structured at this point
   1. LLC taxed as a partnership?
   2. LLC making an election to be an association and then electing S corporation status?
   3. A regular partnership?
   4. Something else?
2. What state are you located in?  This could impact state filing requirements
3. Where are your sales?  In-state, out-of-state, combination?
4. There could be other questions depending on the responses.