How do I handle startup costs with no income?

[jesmithjr86]

There is no income to report on the schedule C.  Can these startup costs be posted with a lost or can the costs be postponed to a year where there is income?

[Just-Lisa-Now-]

Have they started the business just not made any money, or are they still in start up mode and theres no moneymade yet because theyre not actually "working" yet?

[jesmithjr86]

They purchased the inventory in anticipation of opening a retail store but due to Covid were unable to open the doors. Zero income in 2020. They are open in 2021.

[BobKamman]

I would say the start-up was in 2021, and start deducting or amortizing them this year.  

[abctax55]

Inventory is *not* a start up cost that will be amortized.  When it's sold, it's a cost of sales.

[qbteachmt · Accepted solution]

Do they still have inventory and is it still sellable? Because what you see is Asset (money) turned into Asset (stuff on hand). That's why you have no Startup Costs as Inventory. That's expenditure, not expense. That's not a cost until it sells, so that you match income against the cost, which gives you profit for that sale.

What else do you consider Start Up related?

[Taxes-by-Rocky]

I would suggest first doing some research on start up costs and the start up period.  Then turn around and analyze each cost and determine how it should be treated for tax purposes.  Inventory is only one item  you may need to deal with.  Following is a link to an old article but you'll probably want to look for something more current - considering the pandemic, government assistance, etc..

Deducting startup and expansion costs (thetaxadviser.com)