Dear 1 Walnut,
Thank you for your question. I assume you are on cash accouning and your tax year is January to December.
As long as you have the intention of making money with this, even though the outcome is not certain, you can take the expenses in the year you pay for them.
You make the election to deduct research and experimental costs by deducting them on your tax return for the year in which you first pay or incur research and experimental costs. If you do not make the election to deduct research and experimental costs in the first year in which you pay or incur the costs, you can deduct the costs in a later year only with approval from the IRS.
If you are to take them in later years, you have to do so when you receive economic benefit.
the following costs are not included as research developmetn (product development):
Research and experimental costs do not include expenses for any of the following activities.
- Advertising or promotions.
- Consumer surveys.
- Efficiency surveys.
- Management studies.
- Quality control testing.
- Research in connection with literary, historical, or similar projects.
- The acquisition of another's patent, model, production, or process.
AS a sole proprietor you would record expenses on schedule C.
If a partnership on schedule E.