Discussion:Start Up Costs Of Similar Business
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Discussion Forum Index --> Tax Questions --> Start Up Costs Of Similar Business
Tonymontana (talk|edits) said: | 4 June 2008 |
| Client currently has three stores selling Kitchen Cabinets. He purchased a new building in 2007 but has not been able to open the store because the location needed quite a bit of repairs. He says he hopes to open it this year if evertyhing goes well.
Is it safe to assume that the expenses and mortgage interest at the new location are deductible for 2007 and not amortized. I assume it is because it will be an extension of his current business. Am I correct? Anyone? Thanks | |
| 5 June 2008 | |
| 195(c)(1) START-UP EXPENDITURES.--The term "start-up expenditure" means
any amount-- 195(c)(1)(A) paid or incurred in connection with-- 195(c)(1)(A)(i) investigating the creation or acquisition of an active trade or business, or 195(c)(1)(A)(ii) creating an active trade or business, or 195(c)(1)(A)(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 anticip ation of such activity becoming an active trade or business, and 195(c)(1)(B) which, if paid or incurred in connection with the operation of an existing active trade or business (in the same field as the trade or business referred to in subparagraph (A)), would be allowable as a deduction for the taxable year in which paid or incurred. The term "start-up expenditure" does not include any amount with respect to which a deduction is allowable under section 163(a), 164, or 174. | |
RoyDaleOne (talk|edits) said: | 5 June 2008 |
| Start up expenses incurred in the opening of the first retail location may be deducted and amortized. Start up expenditures to open additional locations are considered expansion costs, deductible as trade or business expenses, if they are not capital in nature. | |
Tonymontana (talk|edits) said: | 5 June 2008 |
| Same entity.
Tanks guys. Dat's what I thought. | |
Actionbsns (talk|edits) said: | 1 September 2008 |
| As I was researching a couple issues regarding my client's start up costs, a new issue popped up dealing with expansion costs vs new business. Client owns one restaurant on this island and started another one on another island. Both restaurants are S corps owned by the same individuals. I believe that because each restaurant is its own corporation, they should both be treated individually and I have a new business.
Another question I have deals with the stockholder's moving to the other island. They have rented out their home here and have taken a rental on the other island to make it easier to do the build out and get things started. Are any of those costs considered to be part of the start up costs since they would not have made such a move if it weren't for the new business? | |
| 1 September 2008 | |
| Two seperate corporations no commingling.
Your second questions depends on the facts. If it's a temporary move for business, which it appears it is since he's renting, I would deduct the living expenses if the facts support the stay. | |
