I Bought Over 10k Worth In Live Dogs To Start a Kennel & Haven't Made Anything. How Do I Go About Writing Them Off & Getting My Money Back?

[Deja454212]

I'm also self employed so I pay taxes every year. With writing them off do I get some type of tax break?

[Hal_Al]

It depends on whether you bought them for breeding or to sell.  If for breeding, you depreciate them over 7 years*.  If for resale, your cost becomes your inventory and is not deducted until you sell each dog. Then the cost is deducted as COGS (cost of goods sold).  TurboTax can handle all this.

* "Depreciate any dogs you keep for breeding purposes. According to IRS MACRS rules (Modified Accelerated Cost Recovery System), breeding dogs are seven-year property. This means that you depreciate them over the course of seven years."  Reference:  https://smallbusiness.chron.com/depreciate-dog-kennel-business-24675.html

[Critter]

If you bought some dogs but have never done anything with them then you bought non deductible pets.  

[Mike9241]

@Deja454212 

has your business actually started?  if not, nothing would be deductible

in a court case 

IRS pointed out the taxpayer did not formally advertise the business to the general public and did not do anything to try to find paying clients. IRS said the taxpayer did not establish the business was actually functioning in the year claimed 

even if you started your business certain pre-opening expenses are subject to IRC 195 - start up expenses

(1)Start-up expenditures
The term “start-up expenditure” means any amount—
(A)paid or incurred in connection with—
(i)investigating the creation or acquisition of an active trade or business, or
(ii)creating an active trade or business, or
(iii)any activity engaged in for profit and for the production of income before the day on which the active trade or business begins, in anticipation of such activity becoming an active trade or business, and

once begun then you can deduct the following amount of start up expenses

$5,000, reduced (but not below zero) by the amount by which such start-up expenditures exceed $50,000, and the remainder of such start-up expenditures shall be allowed as a deduction ratably over the 180-month period beginning with the month in which the active trade or business begins.

another thing to consider is the hobby loss rules. 

An activity is presumed to be for profit if it makes a profit in at least three of the last five tax years, including the current year. losses in 3 of the last 5 years allows the IRS to challenge the losses. if it wins income is taxable and most if not all expenses are not deductible.