topic Start-Up Expenses are reported in aggregate - one amount... in Business & farm

How to list startup costs for a business

eccl-5-18 — Thu, 06 Jun 2019 05:22:14 GMT

My wife took a business trip to Orlando to get training before she started her speaking business. When entering the Startup Costs, do I list each one separately such as airfare, hotel, dining, car rental, etc? Or do I list the entire trip?

Start-Up Expenses are reported in aggregate - one amount...

PatriciaV — Thu, 06 Jun 2019 05:22:15 GMT

Start-Up Expenses are reported in aggregate - one amount equal to the total of all expenses incurred. For active business activities, these costs are entered either under Assets/Depreciation or under Business Expenses depending...

Per IRS Pub 535 Business Start-Up and Organizational Costs: "Business start-up and organizational costs are generally capital expenditures. However, you can elect to deduct up to $5,000 of business start-up and $5,000 of organizational costs paid or incurred after October 22, 2004. The $5,000 deduction is reduced by the amount your total start-up or organizational costs exceed $50,000. Any remaining costs must be amortized."

As long as your start-up expenses are less than $5000, you can add them as Business Expenses. Continue past the expense categories (or choose Other Miscellaneous Expenses) to the page titled "Enter Business Expenses Not Yet Reported" and enter the description & amount (see screenshots below - click to enlarge).

If you have more than $5000 in start-up costs, the remainder is entered under Assets/Depreciation as a capital asset for amortization (TurboTax provides this category for you).

If you have Rental Property (passive business) start up costs must be capitalized, subject to depreciation. Enter these costs under Rental Assets/Depreciation as "improvements." See this discussion for more: Start-Up Expenses for Rental Activity

Re: Start-Up Expenses are reported in aggregate - one amount...

BiggyFig — Thu, 25 Feb 2021 05:28:41 GMT

Hi,

I've entered my business startup cost and fall into the over $5000 category. Is this money going to be used to offset income only? It doesn't seem to reduce my tax liability, right?

Thanks,

Todd

Re: How to list startup costs for a business

JamesG1 — Sun, 28 Feb 2021 16:32:01 GMT

Assuming that your start-up costs are less than $50,000,

You may deduct the first $5,000 in start-up expenses against current income.
The portion over $5,000 would be amortized over 15 years, so a portion of this amount would also offset current income.

Expenses paid or incurred after October 22, 2004:

You can deduct up to $5,000 in startup and $5,000 organizational costs as current expenses if the costs are under $50,000, respectively.
You can choose to amortize startup and organizational costs greater than $5,000, respectively, (but less than $50,000, respectively) over a period of 15 years.
If your startup or your organizational costs are more than $50,000, respectively, the excess amount reduces the amount you can deduct.

See TurboTax Best Answer.

@BiggyFig

[Edited 02/28/2021 8:31 AM PST]

Re: Start-Up Expenses are reported in aggregate - one amount...

zamacona1 — Mon, 14 Mar 2022 19:06:35 GMT

This is great. my only question is. where do I find the "assets/depreciation as a capital asset for amortization" in turbotax?

Re: Start-Up Expenses are reported in aggregate - one amount...

DianeW777 — Mon, 14 Mar 2022 19:41:35 GMT

Start up costs have a 15 year (180 month) recovery period using amortization (an equal amount for each month). The amortization is under the Assets expense for your business and you must select to 'Add an asset' once you reach the Business Asset Summary page.

Select Intangibles, Other property on the Describe This Asset page.
Select Amortizable intangibles on the Tell Us a Little More page
Type Start up Costs as the description, then the cost remaining to be amortized and the date you opened for business
Code selection is 195 Business Start Up Costs
Enter 15 years for the Useful Life (in Years)

@zamacona1

Re: Start-Up Expenses are reported in aggregate - one amount...

zamacona1 — Tue, 15 Mar 2022 13:52:00 GMT

Hey Diane,

thank you so much for such a prompt response, super helpful and detailed!

Re: Start-Up Expenses are reported in aggregate - one amount...

zamacona1 — Wed, 16 Mar 2022 16:13:49 GMT

I've done this as you mentioned. So next year that I do my taxes, will turbo tax already have this amortization automatically accounted for? or is there anything else that I would need to do in the future in order to account for this?

Thank you so much for your help!

Re: How to list startup costs for a business

DaveF1006 — Wed, 16 Mar 2022 19:43:43 GMT

Next year, you should be able to receive an amortization schedule transfer over into next year's return. Just to be cautious however, I would keep a copy of this year's schedule in your return just in case the transfer did not take place.

@zamacona1

Re: How to list startup costs for a business

zamacona1 — Thu, 17 Mar 2022 00:50:19 GMT

Okay got it. So it should be stored and automatically transfer next time within my turbo tax account and I’ll keep a copy of my return this year in case there’s any issues.

thank you

Re: How to list startup costs for a business

AmeliesUncle — Thu, 17 Mar 2022 04:09:51 GMT

I realize this original question is quite old, but for any future readers ... training to start a new professional is not deductible, and therefore would not be part of startup costs.

Re: Start-Up Expenses are reported in aggregate - one amount...

jc152 — Fri, 17 Feb 2023 15:10:38 GMT

Hi, @DianeW777 / @DaveF1006

Where do you enter this if you're filing with turbo tax business (partnership llc)? I tried entering under business start up cost summary page but it keep stating that since this is not the first year i'm filing tax it wont' let me enter it there. The only way I can enter this is by add this expense under my rental properties or create entirely new asset. Doesn't seem right to nest this under a rental property and if I create a new asset, it ask me for address and treats this as a rental property.

Re: How to list startup costs for a business

BrittanyS — Fri, 17 Feb 2023 16:11:05 GMT

I'm assuming you are referring to the remainder of the amortization after you previously claimed the startup on your previous return. To enter the amortization you will follow these steps in TurboTax Business:

Under the Assets expense for your business and you must select to 'Add an asset' once you reach the Business Asset Summary page.
Select Intangibles, Other property on the Describe This Asset page.
Select Amortizable intangibles on the Tell Us a Little More page
Type Start up Costs as the description, then the cost remaining from previous return to be amortized and the date you opened for business
Code selection is 195 Business Start Up Costs
Enter 15 years (if this is not the first year you will list the remaining years showing on your previous return) for the Useful Life (in Years)

@jc152

Re: How to list startup costs for a business

jc152 — Fri, 17 Feb 2023 19:01:51 GMT

hi@BrittanyS thanks for the prompt reply.

For the life of me I can't find Business Asset Summary page? Is it under business info -> about your business -> rental real estate property summary? When I enter a new assets here it needs and address and it shows up as a rental property.

Re: How to list startup costs for a business

BrittanyS — Mon, 20 Feb 2023 15:20:21 GMT

You can get to the asset entry page by following these steps in TurboTax Business Desktop:

Click Federal Taxes
Click Deductions
Click Yes for "Did you buy, or do you already own, any depreciable assets related to this business?"
Click Add An Asset
Enter the information for each asset using your prior year return

@jc152

Re: How to list startup costs for a business

jc152 — Mon, 20 Feb 2023 17:02:52 GMT

hi @BrittanyS

I'm been at that screen so many times but I can't find what you have... are you missing a few more steps? See my screenshot below.. and i'm using turbotax business download version.

Click Yes for "Did you buy, or do you already own, any depreciable assets related to this business?"

Re: How to list startup costs for a business

AbrahamT — Mon, 20 Feb 2023 18:12:15 GMT

I have it right here

Interesting that Rental Real Estate Expenses appear here. Did you enter any information for any rental real estate? In an earlier screenshot that you presented, you were in the Business Information tab/ Rental Real Estate Property Summary.

If you entered information there, then you might want to click on Rental Real Estate/Rental Real Estate Assets like this

And see where that takes you. I am not sure what kind of business you have.

Re: How to list startup costs for a business

jc152 — Mon, 20 Feb 2023 19:31:08 GMT

Hi @AbrahamT ,

See below on my business info ;

Did you enter any information for any rental real estate? Yes, and I do not want to add the start up of the LLC cost to the real estate property since it's not pertaining to the individual property but rather the LLC itself. My previous CPA listed it as an amortized expense for the llc and not the individua real estate. If I want to isolate that expense seem like only way is to create another dummy real estate assets and then add that expense there but the issues is that it'll consider this as another real estate property.

there is a section under federal taxes -> deduction called start up cost but it wont' let me enter anything because 2022 is not my first tax year. The LLC was created a few years ago.

Re: How to list startup costs for a business

AbrahamT — Mon, 20 Feb 2023 20:50:22 GMT

I was able to enter it in just fine

See here

And then

You see, I was able to pick up startup costs from 2019.

Re: How to list startup costs for a business

jc152 — Mon, 20 Feb 2023 22:53:14 GMT

@AbrahamT right.. but I've never used turbotax business until this year. In your case if i'm understanding correctly you entered the startup cost in 2019 tax year and this year (2022) you were able to update it?

I've did another test and create a dummy LLC tax and seems like if you do not use turbotax to enter your start up cost when you first create the company, you can't add it if you use turbotax afterwards.

Is there a way for us to file a bug request?