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mhpr
Returning Member

Can I deduct expenses for vehicles I purchased to rent as part of a rental business that I founded but never actually started and made any income?

I bought two motorcycles and a utility trailer to start an LLC motorcycle rental business last Summer (2018).  In December 2018 I decided it wasn't worth doing so I sold all three vehicles already this year (2019).  I couldn't find any place on my 2018 tax return to enter the expenses I paid for for the vehicles in 2018 (taxes, titles, registration, expenses to repair and prepare for rental - approximately $2K).  After completing my return I realized we would be better off taking the standard $24K deduction (married filing jointly) instead of itemizing because our deductions totaled less than $20K including the $2K of expenses I couldn't find where to enter as deductions.

I'm submitting my return as is today as is.  

2 questions:

Will there be any benefit to amending the return to add those $2K expenses if I learn where to include them?  (and please tell me where to include them)

Can I claim the loss of value from selling the vehicles on my 2019 return?  I only had a net loss of about $200 total because I sold one of the 3 for more than I paid.

I've attached my spreadsheet of expenses if this might help to understand my questions ...

Thanks!

1 Best answer

Accepted Solutions
JShaw1
Level 2

Can I deduct expenses for vehicles I purchased to rent as part of a rental business that I founded but never actually started and made any income?

Since these vehicles were never put into service (and will never be placed in service), the associated expenses would not be deductible. It doesn't sound like it would be any value to amend to the lower itemized deductions over the standard deduction that you've already used for filing.

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4 Replies
JShaw1
Level 2

Can I deduct expenses for vehicles I purchased to rent as part of a rental business that I founded but never actually started and made any income?

Since these vehicles were never put into service (and will never be placed in service), the associated expenses would not be deductible. It doesn't sound like it would be any value to amend to the lower itemized deductions over the standard deduction that you've already used for filing.

View solution in original post

mhpr
Returning Member

Can I deduct expenses for vehicles I purchased to rent as part of a rental business that I founded but never actually started and made any income?

Thank you for your response TaxJoy. Perhaps I should clarify. I never earned a dollar, but technically I did start the business because I did create and start a website and did active marketing including driving the cycles around and passing out business cards, marketing to and selling the idea to dealers, posting ads on social media and taking calls from people who were interested. Do I have to earn a dollar to technically say I started the business?
Coleen3
Intuit Alumni

Can I deduct expenses for vehicles I purchased to rent as part of a rental business that I founded but never actually started and made any income?

You can't claim that the vehicles were business vehicles because they were never placed in service. They are personal vehicles and the loss is not deductible.
mhpr
Returning Member

Can I deduct expenses for vehicles I purchased to rent as part of a rental business that I founded but never actually started and made any income?

What constitutes "placed-in-service"? Do you have to actually earn Revenue renting them or can marketing with them be reconsidered "placed in service" ?
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