Start up cost deduction with zero income

michelle1388 · ‎07-06-2023

Hi Hi, my client opened up a start-up company last year. The business has zero income but incurred around $30k in expenses. Will it make any difference to his tax return if we select to take the $5000 start-up cost deduction?

George4Tacks · ‎07-07-2023

That sounds like a really good question for them to present to their tax professional. That person will have the complete picture of all of the aspects of the tax return.

Answers are easy. Questions are hard!

sjrcpa · ‎07-07-2023

Did the business really open last year?

The more I know the more I don’t know.

Accountant-Man · ‎07-07-2023

Read IRC section 195.

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IRonMaN · ‎07-07-2023

If they opened up the business and had $30K in expenses but zero income, it sounds like someone forgot to unlock the front door of the business.

Slava Ukraini!

michelle1388 · ‎07-09-2023

thanks everyone for your reply. Yeah... they started their business last year and are in the R&D stage of the business.

sjrcpa · ‎07-10-2023

Then read IRC Section 174, too.

The more I know the more I don’t know.