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Level 1
posted Mar 2, 2022 10:30:42 AM

Can I use Schedule C to report my self employment activity in a foreign country?

I am a sole proprietor. I bought in Russia a land and a manufactured structure, which is a drive thru coffee shop.

To establish a business I spent some time in Russia to register the land, to connect utilities etc. The business is not making any profit and I don't have license to operate since it is not yet registered. While doing prep work, dealing with construction, I incurred MIE expenses.

1. Can I claim MIE expenses for the time that I spent on preparing my business while I was in Russia?

2. Can I claim these MIE on a separate Schedule C and show loss?

0 1 129
1 Replies
Expert Alumni
Mar 2, 2022 11:53:36 AM

Yes,  You should file a Schedule C.  Even if you did the work outside of the United States, if you were a US resident during the tax year, you have US  self-employment income that goes on Schedule C

 

Yes, you can claim M&IE for the time that I spent preparing my business while I was in Russia

Start-up costs can be capitalized and amortized if they meet both of the following tests:

  • You could deduct the costs if you paid or incurred them to operate an existing active trade or business (in the same field), and;
  • You pay or incur the costs before the day your active trade or business begins

No, you should not claim the M&IE on a separate Schedule C to show a loss.  The second guideline above requires that you did start a business, even though you aren't currently making a profit.