@tagteam wrote:
@Anonymous wrote:
It is important to note that the start date of a business can change depending on other factors. For example, under certain circumstances, the IRS may analyze a company’s activities to determine whether they are liable for taxes.
I found that particular passage to be somewhat confounding since even if the business received as little as $1 in income from a client or customer, in exchange for goods or services, it would be difficult to argue that the company is not open for business.
The taxpayer here has given several different dates, but I think that if they first got paid in January 2020, it is reasonable to consider the business open in 2020 and file accordingly. If they were actively seeking clients in December 2019, it could be argued that the business was active in 2019, but I don't think the trouble of amending the 2019 return is worth it.
What I'm more interested in at this point are, what exactly are the taxpayer's "startup costs." Placing a personally owned drone in service in the business in January 2020 is not a deductible startup cost, rather, it is an asset that must be depreciated based on it's class life and the FMV at the time it was placed in service. The taxpayer also mentioned training and licensing, which is not a deductible business expense if the training and licensing were needed to meet the minimum qualifications to operate the business. The taxpayer hasn't really mentioned other startup costs.
Some expenses that might have been paid for in 2019 that would be deductible as startup costs in 2020 could include buying office supplies, building a web site, getting business cards, advertising, and so on. But the taxpayer would have to let us know what they are, if any.
