Business Has Expenses but No Income

[JCOrie21413]

My husband started a Consultant LLC for security services. He expected to receive certification from the Department of Criminal Justice Services but it was denied, needing additional information. In order to even apply for the certification, he had to take several classes to obtain various certifications. Can he use those courses as business expenses?

[Vanessa A · Accepted solution]

Probably not.  It depends on what he was doing prior and why he took the courses as to whether or not he can claim the courses as business expenses.

 You cannot claim educational expenses or expenses to become certified as a business expense when they are needed to enter a new career. Expenses are not deductible when they are

1. Used to qualify for a new career. Ex. He was a plumber and now he wants to start a security business.
2. They are the minimum requirements for the profession.
   • Example. You are in school to get a Masters in Accounting to be a CPA

 However, if he didn't need those courses to start his career or business and he just wanted to maintain or improve skills required in the taxpayer’s existing trade or business, then he could If:

1.  He has to keep certificates up to date to carry on his career (as with Continuing Education Credits) or,
2.  He wants to improve his business skills, once he is already in the business, then he would be able to claim those costs as business expenses.
   • Ex.  He was already a security consultant as a profession and decided to go out on his own so he took the courses to improve his marketability. 

However the fact that these courses were denied could impact if they are deductible or not if he needed them to legally operate his business.  If he was not able to operate the business without these certificates, then he would not be able to deduct these courses.