Business tax

[wubeibei]

I will be purchasing a business in CA by the end of this year. My S-corp was established in Aug. I currently work and receive both W2 and 1099. My purchase closing date can be either the end of this year or the beginning of next year. Which closing date is more tax-advantaged? Thank you.

[Loretta P]

Congratulations wubeibei on your new S-Corp!

I'm assuming you are purchasing an ongoing concern and will begin/continue operations immediately after the sale closing.  

Start up costs must be amortized over 15 years.  If your start up costs are less than $50,000 it may qualify for a a special provision which would allow some of the costs (up to $5,000) be deducted as an immediate expense with the balance being amortized over 15 years.  

You would also need to look at the income earned in your S-Corp for TY 2024 and what is the projected income for TY2025.  

This can be a complicated situation that can benefit from sitting down with a good tax professional to review your specific situation.  

The IRS has a great resource for business owners that discusses all the tax aspects.  It can be found here:

IRS small business owner tax center 

Also you may want to review the rules regarding start up expenses found here on the Turbo Tax link:

Turbo tax start up costs