I have a 9yr old ecom website, that's losing to Amazon. I signed up for a $35K FBA Store training org, that's a one lifetime fee. Can I amortize it over how many years?

[lizzygee]

I have a sole proprietorship and have 2 e-commerce websites since 2008. Sales increased every year until the last 4 years, it has declined.  I think it is due to Amazon's dominance.  I signed up for a  $35K training package with FBA Stores who train and coach members to open and maintain successful Amazon Seller accounts.  This $35K is a one time cost for lifetime training, which equates to as long as they are and we are still in business.

Unfortunately it has been a huge loss for so many people, and Amazon is now suing FBA Stores.  In the meantime, I am out $35K. 

Is there a way, like amortizing or depreciating this FBA Store training package?

[PatriciaV · Accepted solution]

If this purchase could be considered a franchise fee, it would be amortized over 180 months (15 years). But if it was marketed and sold as a training course with ongoing support, it would be considered a business expense. As such, it would be reported and deducted in the year of purchase.

Any business loss created by this expense would offset your other taxable income. And if the business loss created a Net Operating Loss (NOL) this year, you would normally carry back the NOL to the two prior tax years. Then, if there was any leftover NOL after the carryback period, you would carryforward the balance for up to 20 years.  

You can elect to waive the two-year carryback period and use the NOL for the carryforward period only.  This may be advantageous if the taxable income in the past two years was low or if you expect to have more taxable income in the future. TurboTax will ask you about the NOL carryback in the review section.

[PatriciaV]

I'm curious to know why you didn't find this helpful, but you did recommend the answer. Your feedback will allow me to improve my answers for other users.

[lizzygee]

I have had a full time W-2 day job for most of my working life, and was hoping that my e-commerce websites would bring me more income.  Instead my Schedule C has been struggling at a loss, but my full time job, brought in money that I paid taxes on.  I am currently without a W-2 job in 2018, and my Schedule C is still operating at a loss.  Could I carry back the NOL to the prior two years to offset the taxes that I paid for my W-2 jobs?

[lizzygee]

This is extremely helpful!  This is the first time I've posted to Turbo Tax, and I didn't know if I click on the "Recommend answer" that it closes the thread.  If there is a "Helpful" button that I'm also supposed to click, I don't know where it is.

[PatriciaV]

Yes, you may be able to offset any income you reported in prior years by carrying back an NOL from the current year. You will need to amend those prior years. Start with the oldest one first. If you used TurboTax, see this post: <a rel="nofollow" target="_blank" href="https://ttlc.intuit.com/questions/1894381">https://ttlc.intuit.com/questions/1894381</a>
Not to worry about the voting issue. I just wanted to be sure the answer was helpful.

[lizzygee]

Thanks PatriciaV!  I clicked on the green "Recommend answer" button for this question, as your answer is truly excellent!  Then I went to your page, and it shows 1helpful vote, and a check-mark that the question is answered.  I can see that the comment thread is still active.

[PatriciaV]

Thanks for the generous comments!