When to deduct expenses for a business that does not start until the following year?

[GoldenJoe]

I filed Articles of Incorporation for a new business in December 2022. The Articles of Incorporation for the business weren't approved until 2023. As such, the business was not open until 2023. During November and December 2022, I began purchasing equipment for the business in anticipation of opening. Can I deduct these expenses for the 2023 tax year since they relate to the opening of the business, or must they be deducted for 2022 despite the business technically not existing yet?

[Mike9241 · Accepted solution]

you can't deduct expenses paid or incurred before the business starts. these preopening expenditures are of two classes - capital meaning machinery. equipment, office furniture etc which you use the date the business opened for the date placed into service for depreciation purposes.  other expenses like supplies are start-up expenses Code section 195. when you do the 2023 return Turbotax will take you the the tax handling of them.