Equipment purchase deduction

[ton777]

I am sole proprietor of a LLC with no revenue in 2018. During the same year I purchased equipment necessary to make the business profitable in 2019.Can I deduct the equipment purchase in my 2018 return even if I had no revenue?

[TaxGuyBill]

If the business was 'open' in 2018, yes, the expenses are deducted or depreciated in 2018.

[ScruffyCurmudgeon]

@TaxGuyBill   There are limitations on the amount of such deductions! q.v.,

[TaxGuyBill]

I read it as the equipment was purchased after the business was 'open'.  If that is the case, there are not really limits.


If I misunderstood and the equipment was purchased BEFORE the business was actually 'open', it depends on if it is Depreciable equipment (over $200, or in some cases, over $2500) or not.

Depreciable equipment purchased before the business was open can usually be fully deducted once the business is 'open' (via the Special Depreciation Allowance).  Non-depreciable items purchased before the business opens are "Startup Expenses", and could be limited in certain circumstances.

[ScruffyCurmudgeon]

The OP posted two related questions, and I read this one first, and fro it, and then fro what I could deduce from his continued reference to "no revenue" concluded that he wasstill in formation and not "open for business."  Thus truly still in start-up.

[ton777]

Thank you for your replies, the business was open when the purchases was made.

[Anonymous]

something you should consider if you haven't already.   if you can and do fully deduct the cost in 2018, what will your tax situation look like in both 2018 and 2019.     could you have a net operating loss in 2018?.  In that case you would have to carry it back to 2016 unless you make an election to carry it forward to 2019 (there will be a box to check in TT to make this election)

[ton777]

Ok many thanks for your help, I will consider carry the loss forward.