Can I claim start up cost for a business that I opened but didn't get revenue from yet?

Forum|Forum|6 years ago
February 6, 2020
2 replies
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TurboTax Self Employed Online

jtax

Level 10

See if this guidance from the IRS helps you.

The issue is not whether there is revenue but rather when the business begins. I.e. you might open your doors and start working on Dec 15th, but not bill your first client until January. You business began on 12/15 even though no revenue came in until the next year.

https://www.irs.gov/publications/p535#en_US_2018_publink1000208939

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Carl

Level 11

Assuming this is a SCH C business, you claim your startup costs in the first tax year the business is officially "open for business". It does not matter if the business has income or not. But understand this:

- In that first year of business your deductible startup expenses are limited to the *LESSER* of $5000 or the amount of taxable business income received in that first tax year. Any amount over that is amortized (not capitalized) and deducted (not depreciated) over the next 15 years.

Now even though you have no buseiness income from which to deduct your startup expenses in the first year, if you don't "claim" those expenses in the first year, then you can not carry any start-up expenses forward to the following years.

So for you with no business income in the first year, it looks like all of your startup expenses will be amortized over 15 years, starting in 2020.