Would a sole proprietorship or LLC benefit me for expenses I have incurred to help my elderly father with his property investments I will inherit at some point? I do not want to ask for reimbursement and he did not setup a business.

[CesarJ]

If you help manage your elderly parent's property investments without a formal business, you generally can't deduct related expenses as business deductions unless you operate a sole proprietorship or LLC for that purpose.

Forming a sole proprietorship or LLC focused on managing these investments might allow you to deduct ordinary and necessary business expenses. These could include costs like travel, office supplies, or professional fees directly related to managing the property.

However, for expenses to be deductible, the activity must be engaged in for profit and properly reported as a business. Since you aren't set up as a business, personal expenses or those not connected to a business likely won't qualify.

Considering you don't seek reimbursement, establishing a legal business entity could provide a framework to deduct legitimate expenses. Still, qualification depends on meeting IRS requirements for business activities.

[cherylc1312]

Thank you for your response.  My intent is to make a profit at some point after I inherit the rental properties but I won't make a profit until then and while I hope that day is far off I have no idea. 

My father has been showing me how he handles his rental properties and the people he works with, with the intent of me taking them over but is not ready to give them over (even partially) so I'm not sure if my expenses would count as being directly related to managing the property.  I would like to purchase a laptop to be able to remotely help him from afar especially as he often has computer problems I have to help him with for the desktop he uses for the properties and for my travel expenses that are happening more often and not just visits to visit but helping him in some way to go over things with the properties.   I'm finding the additional travel expenses are costing my immediate family and a purchase of a new laptop would also.

I'm not sure how much expenses as a sole proprietorship would even affect my taxes but I'm hopeful I could write off the full laptop cost and travel expenses, my main concern is if nothing changes and I still have no profit in 3 of 5 years that it would cause an IRS tax audit and be classified as a hobby causing me to pay the expenses back.  Do you think a sole proprietorship would be beneficial to me?  When I take over any of fathers properties I would create an LLC so I am not personally liable but I'm not sure that LLC is necessary at this time since there are setup and annual costs for the LLC with or without profit.

[MinhT1]

A sole proprietorship or a LLC must be a for-profit endeavor for you to deduct business expenses. To be deductible, business expenses must be ordinary and necessary to the business. You cannot deduct expenses and avoid reimbursement by not charging for your services.

As a self-employed person, you are allowed to deduct business expenses related to your business. In fact there is no absolute limit but you have to keep records of all your expenses in case of verification or audit by the IRS.

The IRS says: To be deductible, a business expense must be both ordinary and necessary.

Please read this IRS document for more information.

[Mike9241]

put another way. if you don't own the properties, then you must be reimbursed by your father to cover the expenses and something extra to make the business profitable.