How does the IRS define "active trade or business"? In my laymen opinion that could be before the "doors open" or before having any revenue in some cases. The information below provides no clear definition of when an active trade or business begins. How do I find "such regulations the Secretary may prescribe"?
The real question here is can I deduct startup costs for a business that will not open it's doors for another year or two but I am very much actively involved in?
IRS Code section 26 USC 195: Start-up expenditures states:
(2) Beginning of trade or business
(A) In general
Except as provided in subparagraph (B), the determination of when an active trade or business begins shall be made in accordance with such regulations as the Secretary may prescribe.
(B) Acquired trade or business
An acquired active trade or business shall be treated as beginning when the taxpayer acquires it.
