Startup costs for writer

[smarcus20]

In February of 2019 I signed a book contract with a mainstream publisher and received an advance, which was the start date of my business.  During 22 months prior to that I attended a writers conference to make contacts needed to secure an agent/publisher and took a research trip to assist in preparing my proposal and judging feasibility etc.  Can I deduct the cost of the two trips as part of $5000 startup costs (which were 100 percent business and not for personal enjoyment)  even though they didn’t take place in 2019?

If so, can the cost of meals while traveling be included with the Startup costs?

[AnnetteB6]

Yes, the cost of the trips could be deducted as a start-up cost for your business.  If the total is less than $5000, it can be deducted as a business expense on your 2019 return or the total can be amortized as an Asset.  

As for meals, since the business meals expense is allowed up to 50%, include only 50% of the meals as start-up costs.  

Also, be sure that you keep good documentation for your expenses that you are claiming as a start-up cost.  

For more guidance, see the following article:  Startup Business Tax Tips

[smarcus20]

Thank you for the response.

Is there a time limit on how far before the business start date I incurred the startup costs?  My business started in 2019 when I received the book contract, but I attended the writiers conference in 2017.  I can’t find any sort of time limit for startup costs in the IRS pubs.

Also, if I purchased a laptop for this purpose also in 2016 can it still be included as a business asset in 2019?

[JohnB5677]

The IRS states startup cost to be: 

"Start-up costs include any amounts paid or incurred in connection with creating an active trade or business or investigating the creation or acquisition of an active trade or business."

There is no mention of a time limit; however, you would have to prove that it was directly related to the business.

Additional items included in Startup Cost are:

Technological expenses include the cost of a website, information systems, and software, including accounting and payroll software, for a business. Every business requires some form of equipment and basic supplies. Before adding equipment expenses to the list of startup costs, a decision has to be made to lease or buy.

The laptop may fall in these categories, but it may be easier to expense it at fair market value after the start up date.

Understanding Startup Cost