Reporting Franchise Fee

[ppelton82]

Hi there!

I have paid a franchise fee this year but will not build and open until mid year 2023.  Do/can I deduct this fee for 2022?  If yes, how and do I need to have an LLC to file under?

[mikafeed58]

According to the IRS, franchise fees fall under “Section 197 Intangibles" and are not tax deductible. However, since the IRS requires you to amortize the franchise fee over 15 years, you can recoup the fee through a depreciation tax deduction every year during that time period.

Please follow the link below for further information:

Part I Section 197.--Amortization of Goodwill and Certain ... - IRS

https://www.irs.gov › pub › irs-drop

[biggxj]

link just goes to IRS.GOV...can't figure out where you were trying to point to...

[PaulaM]

Report a initial franchise fee under assets, intangibles for your business. The fee is amortized over 15 years. Then once you are operational, the fee becomes an operating expense.