Technical topics regarding tax preparation.
3-Dec-2021 5:13pm
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Bunch of individuals form a partnership.
They are setting up their business currently.
payroll is about 20k per month.
they are buying equipment
no sales force yet, as they are not ready until 2022 to start promoting and selling their product.
Is client locked into classifying these costs as start up costs and amortizing all but 5k over 15 years?
3-Dec-2021 6:09pm
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3-Dec-2021 6:15pm
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4-Dec-2021 12:51pm
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No income probably means not in business, which in turn means expenses must be capitalized.
Steve
4-Dec-2021 2:18pm
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they formed an LLC, they have staff, they need to install the equipment for a few months, and then get a sales force
so it looks like these are start up costs they have to be amortized over 180 mos except for 5k.
jsut wanted to confirm
sort of stinks to have this dynamic
4-Dec-2021 2:37pm
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they are buying equipment. That's not a 195 cost.
4-Dec-2021 4:44pm
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The rationale is to at least try to treat purchasing and start up entrepreneurs equally.
Steve
4-Dec-2021 7:00pm
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Nilodop wrote:they are buying equipment. That's not a 195 cost.
Correct. It’s an asset waiting to be placed in service when the trade or business commences.
-Brian
Director of Tax Accounting Methods & Credits
SourceAdvisors.com
Opinions my own.
4-Dec-2021 7:01pm
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that's very helpful...ty!
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