Concerning: Sole proprietorship
I have $20K in Startup costs (labor for software developement) in past years 2019,2020. Launched business in 2021, it failed in 2021.
What is the correct treatment and how do you enter it into Turbo Tax. When I enter the start up costs into turbo tax (Home and Business - Desktop version), the software takes amortizes $5K of the start up costs. The remaining 15K I think should be a capital loss. However, I am not sure how to enter it. It's not a sale, but turbo tax seems to want me to report it as a sale. However, it's a capital loss.
1) How do I enter the capital asset and how do I take the capital loss?
2) What form should the capital loss be reported and how do you enter it?
Pub 535
If your attempt to go into business is un-
successful. If you are an individual and your
attempt to go into business is not successful,
the expenses you had in trying to establish
yourself in business fall into two categories.
1. The costs you had before making a deci-
sion to acquire or begin a specific busi-
ness. These costs are personal and non-
deductible. They include any costs
incurred during a general search for, or
preliminary investigation of, a business or
investment possibility.
2. The costs you had in your attempt to ac-
quire or begin a specific business. These
costs are capital expenses and you can
deduct them as a capital loss.
If you are a corporation and your attempt to
go into a new trade or business is not success-
ful, you may be able to deduct all investigatory
costs as a loss.
The costs of any assets acquired during
your unsuccessful attempt to go into business
are a part of your basis in the assets. You can-
not take a deduction for these costs. You will re-
cover the costs of these assets when you dis-
pose of them
