If this purchase could be considered a franchise fee, it would be amortized over 180 months (15 years). But if it was marketed and sold as a training course with ongoing support, it would be considered a business expense. As such, it would be reported and deducted in the year of purchase.
Any business loss created by this expense would offset your other taxable income. And if the business loss created a Net Operating Loss (NOL) this year, you would normally carry back the NOL to the two prior tax years. Then, if there was any leftover NOL after the
carryback period, you would carryforward the balance for up to 20 years.
You can
elect to waive the two-year carryback period and use the NOL for the
carryforward period only. This may be
advantageous if the taxable income in the past two years was low or if you expect to have more taxable income in the future. TurboTax will ask you about the NOL carryback in the review section.
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