Why the "E" versus the "C"? The Schedule E will phase out a certain amount of passive losses you might incur in writing down/off this mentoring program, whereas the "C" would not, thus somewhat "skewing" your bottom line. It really all depends on your true future intent.
It is definitely a "grey area" in accounting for the costs in that your hope is to eventually make this into a business. If this is truly the case, then yes you should start up a Schedule C - and amortize these costs over a 7 to 10 year period. You would enter this information in the "Depreciation and Amortization" section of the program - same area as the building and other assets - just in the amortization section and not the depreciation section.
