It's not a business expenses. Expenses incurred for a business prior to the business being "open for business" are classified as start up expenses. Start up expenses can not be claimed until the first year the business is actually open for business. It does not matter in what tax year the start up expense is incurred either. I've known business to have 3 years or more of expenses before they are officially "open for business" and that doesn't matter. The total of all startup expenses are claimed "as" startup expenses in the first year the business is open for business.
You are limited to deducting a maximum of $5000 in startup expenses in your first year open for business. If you have more than $5K of startup expenses, then the excess is amortized (not capitalized) and deducted (not depreciated) over the next 15 years of the business.
Generally, if your taxable business profit is less than $5K in that first year, then it only makes sense to deduct in that first year, the amount of your taxable profit so that the business will pay no taxes in the first year (except for self-employment taxes, of course.). Then the remaining gets amortized and deducted over the next 15 years.
