First year, so many big home/land expenses
 

Sorry if any of this has been covered :o

First question... I can deduct up to $5,000 in start up expenses my first year of business - does this include any home or land improvements/repairs?

So far this year I've paid:
- $2,180 to replace baseboard covers (required by licensing)
- $850 for a fence (also required by licensing).
- $1500 for tree removal (licensing didn't say this was required but the trees were dying and posed a hazard to the yard where the children would play).
- $4,000 total for new concrete and landscaping (all of this was individually billed out and paid, each item was less than $2500).

Second question... Can all of the above be claimed in one year under the $2500 rule?

Third question... Since licensing required the baseboard covers and fence (and I have it in writing) I planned to deduct those 100%. The remaining items would be deducted at my T/S%, correct?

I'm not Tom, but I would get a note from licensing about the tree, too!

start up costs
 

Originally Posted by Max:
Sorry if any of this has been covered :o

First question... I can deduct up to $5,000 in start up expenses my first year of business - does this include any home or land improvements/repairs?

So far this year I've paid:
- $2,180 to replace baseboard covers (required by licensing)
- $850 for a fence (also required by licensing).
- $1500 for tree removal (licensing didn't say this was required but the trees were dying and posed a hazard to the yard where the children would play).
- $4,000 total for new concrete and landscaping (all of this was individually billed out and paid, each item was less than $2500).

Second question... Can all of the above be claimed in one year under the $2500 rule?

Third question... Since licensing required the baseboard covers and fence (and I have it in writing) I planned to deduct those 100%. The remaining items would be deducted at my T/S%, correct?

The limits for start up costs do not include land improvements or home improvements. They only include items you would normally deduct in one year. Start up costs also only apply to items you purchase before you go into business, not your first year in business.

So, you can deduct in one year 100% of the baseboard covers and fence because it was required by licensing. You can deduct the time-space % of the tree removal, concrete and landscaping in one year.

Thanks Tom!!