You should have set up the full $65,000 in 2018. Since it is franchise, under Section 197 it could be amortized for 15 years. I would recommend amending 2018 and putting in the $65,000. It is not only the cash down, but liability amounts as well. As I stated before, franchise fee (acquisition) is a Section 197 Intangible. I don't know why for tax purposes you used 25 years instead of the 15 under Section 197. Section 197(b) provides that no other depreciation or amortization deduction shall be allowable with respect to any amortizable section 197 intangible other than provided in Section 197(a).
I don't know what the $600 and $4,000 amounts are for. Whatever amounts are paid to extinguish the $45,000 debt are not deductible...but the interest portion of those payments would be deductible. All payments made over time have an interest component, whether stated or not. If not stated, then the rules for determining unstated interest apply.
If amounts are being paid for recurring franchise fees, those are currently deductible. There is a difference between the amount paid for acquiring of a franchise and the monthly recurring franchise fees. Usually the monthly recurring fees are considered like a monthly fee that helps pay for advertising, service, etc., etc., that the franchisor provides as part of the franchise agreement. Different than the amount paid to acquire the right to have the franchise.
Please review the Pub 535 information I provided.
This thread may also help you out
https://ttlc.intuit.com/community/taxes/discussion/what-franchise-expenses-are-deductible-1st-year/0...
Good luck
**Disclaimer: Effort has been made to offer correct information; but due to the discussion forum limitations, the poster disclaims any legal responsibility for the accuracy of the poster's response**
