@Deja454212
has your business actually started? if not, nothing would be deductible
in a court case
IRS pointed out the taxpayer did not formally advertise the business to the general public and did not do anything to try to find paying clients. IRS said the taxpayer did not establish the business was actually functioning in the year claimed
even if you started your business certain pre-opening expenses are subject to IRC 195 - start up expenses
(1)Start-up expenditures
The term “start-up expenditure” means any amount—
(A)paid or incurred in connection with—
(i)investigating the creation or acquisition of an active trade or business, or
(ii)creating an active trade or business, or
(iii)any activity engaged in for profit and for the production of income before the day on which the active trade or business begins, in anticipation of such activity becoming an active trade or business, and
once begun then you can deduct the following amount of start up expenses
$5,000, reduced (but not below zero) by the amount by which such start-up expenditures exceed $50,000, and the remainder of such start-up expenditures shall be allowed as a deduction ratably over the 180-month period beginning with the month in which the active trade or business begins.
another thing to consider is the hobby loss rules.
An activity is presumed to be for profit if it makes a profit in at least three of the last five tax years, including the current year. losses in 3 of the last 5 years allows the IRS to challenge the losses. if it wins income is taxable and most if not all expenses are not deductible.
