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eccl-5-18
New Member

How to list startup costs for a business

My wife took a business trip to Orlando to get training before she started her speaking business. When entering the Startup Costs, do I list each one separately such as airfare, hotel, dining, car rental, etc? Or do I list the entire trip?
1 Best answer

Accepted Solutions
PatriciaV
Level 7

How to list startup costs for a business

Start-Up Expenses are reported in aggregate - one amount equal to the total of all expenses incurred. For active business activities, these costs are entered either under Assets/Depreciation or under Business Expenses depending...

Per IRS Pub 535 Business Start-Up and Organizational Costs: "Business start-up and organizational costs are generally capital expenditures. However, you can elect to deduct up to $5,000 of business start-up and $5,000 of organizational costs paid or incurred after October 22, 2004. 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."

As long as your start-up expenses are less than $5000, you can add them as Business Expenses. Continue past the expense categories (or choose Other Miscellaneous Expenses) to the page titled "Enter Business Expenses Not Yet Reported" and enter the description & amount (see screenshots below - click to enlarge).

If you have more than $5000 in start-up costs, the remainder is entered under Assets/Depreciation as a capital asset for amortization (TurboTax provides this category for you).

If you have Rental Property (passive business) start up costs must be capitalized, subject to depreciation. Enter these costs under Rental Assets/Depreciation as "improvements." See this discussion for more: Start-Up Expenses for Rental Activity


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3 Replies
PatriciaV
Level 7

How to list startup costs for a business

Start-Up Expenses are reported in aggregate - one amount equal to the total of all expenses incurred. For active business activities, these costs are entered either under Assets/Depreciation or under Business Expenses depending...

Per IRS Pub 535 Business Start-Up and Organizational Costs: "Business start-up and organizational costs are generally capital expenditures. However, you can elect to deduct up to $5,000 of business start-up and $5,000 of organizational costs paid or incurred after October 22, 2004. 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."

As long as your start-up expenses are less than $5000, you can add them as Business Expenses. Continue past the expense categories (or choose Other Miscellaneous Expenses) to the page titled "Enter Business Expenses Not Yet Reported" and enter the description & amount (see screenshots below - click to enlarge).

If you have more than $5000 in start-up costs, the remainder is entered under Assets/Depreciation as a capital asset for amortization (TurboTax provides this category for you).

If you have Rental Property (passive business) start up costs must be capitalized, subject to depreciation. Enter these costs under Rental Assets/Depreciation as "improvements." See this discussion for more: Start-Up Expenses for Rental Activity


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BiggyFig
New Member

How to list startup costs for a business

Hi,  

 

I've entered my business startup cost and fall into the over $5000 category.  Is this money going to be used to offset income only?  It doesn't seem to reduce my tax liability, right?

 

Thanks,

Todd

 

JamesG1
Expert Alumni

How to list startup costs for a business

Assuming that your start-up costs are less than $50,000,

  • You may deduct the first $5,000 in start-up expenses against current income. 
  • The portion over $5,000 would be amortized over 15 years, so a portion of this amount would also offset current income.

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.

See TurboTax Best Answer.

 

@BiggyFig

 

[Edited 02/28/2021 8:31 AM PST]

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