This questions pertains to the timing of taking startup expenses when the expense occurred in a different year than when business operations began.
Fact patters:
1. Client who incorporated a new business at the end of 2022.
2. They had various organizational/start up costs associated with this.
3. Business operations will not/could not begin until 2023
4. Client is using the Cash method of accounting
From my understanding, to deduct organization/start-up cost business operations must have begun.
My read here would be that, even though the expense occurred in 2022 they can't take it yet as business operations did not commence during that year. Instead, we will have to wait until 2023's return to take the start up expenses (even though they occurred in 2022) because that is the year operations started.
Does anyone have a different read on this situation?