In October of 2023 I began incurring start-up costs for a business that will involve on-line sales of third-party products via a website. I have research costs and regular organization costs of approximately $2,500 that will be incurred before 12/31/23. I also must pay a third-party to develop my website. That cost will be approximately $5,000. I will own and administer the website once it is available; at that point the contractor is out.
If these payments are all made before 12/31/2023, but the website isn't operational before January 1, 2024, what can I deduct for 2023? Is the website developer contractor fee an expense, an amortizable start-up cost or a depreciable asset (the website that results)? If it's a depreciable asset, is it available for Sec. 179 treatment?
If I must defer deductions of whatever sort until 2024, how will these costs be treated if the business doesn't make sales or doesn't turn a profit?
Many thanks for you help!
David Brown
