I bought a camera and lens in 2017 at cost of $2500. I had no photo sales in 2017 but expect to in 2018. Can I deduct the expense of the camera gear on my 2017 return?

[MichaelDC · Accepted solution]

Yes , you can still claim business-related expenses, even though you had no revenue, but only expenses paid for the current tax year. (2017) This flip side of this is that you couldn't claim expenses in 2018 that you paid for in 2017.

You can deduct expenses as long as you can prove that you opened or were in business in the year expenses were incurred. To be deductible, a business expense must be both ordinary and necessary.

Also, the IRS expects that if you start a business, you intend to make money at it. If you don't, your business is likely to be a hobby, in which case you can only claim expenses to the extent of your hobby income. To determine if your business is a hobby, the IRS looks at numerous factors, including the following:

·         Do you put in the necessary time and effort to turn a profit?

·         Have you made a profit in this activity in the past, or can you expect to make one in the future?

·         Do you have the necessary knowledge to succeed in this field?

·         Do you depend on income from this activity?

·         Are your losses beyond your control?

As a Business, you are considered to be self-employed. You report both income (if any) and expenses on Schedule C/Business Income & Expenses.

TurboTax will guide you step by step through the process. 

·         Type in "business expenses" in the search box in the right-hand corner of your screen

·         Click jump to business expenses.

 Please feel free to post any additional details or questions in the comment section.

[sudbury4]

Thanks for your response.  Concerning business expenses, would the category for the camera and lens be "Supplies" or "Other Miscellaneous Expenses" or does it matter as long as it goes into one of these?

[MichaelDC]

For the equipment, go through the asset section under expenses.