How JustAnswer Works:

  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.

Ask Merlo Your Own Question

Merlo
Merlo, Accountant
Category: Tax
Satisfied Customers: 9783
Experience:  25+ years tax consulting. Specializing in returns for US citizens living abroad
9573734
Type Your Tax Question Here...
Merlo is online now
A new question is answered every 9 seconds

Hi, I invested several thousand dollars of my own money in

Resolved Question:

Hi, I invested several thousand dollars of my own money in setting up a business in 2009. The money was spent on equipment, inventory, buildout, and admin expenses. Can I deduct these expenses from my personal tax return? If yes, how?
Submitted: 4 years ago.
Category: Tax
Expert:  Merlo replied 4 years ago.

Did you actively start this business in 2009?

 

 

Customer: replied 4 years ago.
Yes the business was started in 2009.
Expert:  Merlo replied 4 years ago.

Hello again nigbal,

 

As long as your business was started in 2009, then you may deduct these expenses. However, keep in mind that not all of your purchases can simply be written off in one year. Assets that you purchase such as computers or other equipment must be depreciated over a period of years, and cannot be expensed all in one year.

 

Also, you do not write off the cost of your inventory until it is actually sold. The inventory is just another asset purchase and you do not claim it as an expense until you sold part of that inventory.

 

Your income and expenses from the business should be reported on Schedule C of your tax return.

 

 

Thank you nigbal

 

 

Customer: replied 4 years ago.

Thank you. XXXXX also list constrution costs, and rental expenses on schedule C? I am not familiar with schedule C, do these expenses fit under any specific category? Please confirm that I can deduct this on my 2009 personal tax return

Expert:  Merlo replied 4 years ago.

Hello niqbal,

 

Yes, you may deduct the cost of rent you paid for your business office or any other expenses you had. The only thing you cannot deduct all at one time is the cost of your inventory and the cost of any equipment or other assets that you purchase. Assets or equipment which have a useful life of one year or more must be depreciated over a set number of years depending on the class of the item. For example, computer equipment is depreciated over a period of 5 years. So if you bought a computer at a cost of $1,000 you would claim a depreciation expenses of $200 for each of the next 5 years.

 

Schedule C has a line by line description of the type expenses you can deduct. There will be a separate line for rent paid and other expenses you had.

 

 

Thank you niqbal

 

 

Customer: replied 4 years ago.

Sorry one more clarification. The business is set-up as an S-Corporation. Can I still use schedule C?

Expert:  Merlo replied 4 years ago.

Hello niqbal,

 

No, you most definitely do not use Schedule C if you are set up as an S Corp. That is entirely different.

 

The S Corp itself will file a separate tax return on Form 1120S. On that return you will report the income and expenses of the company. The S Corp will also issue a W-2 form to you for any salary that you paid yourself and will also issue you a K-1 form to report any dividends you received. You will then simply report the income form the W-2 and the K-1 form on your own personal tax return.

 

But the same rules apply as far as what you can expense and how you handle the assets and inventory.

 

 

Thank you niqbal

 

 

Merlo, Accountant
Category: Tax
Satisfied Customers: 9783
Experience: 25+ years tax consulting. Specializing in returns for US citizens living abroad
Merlo and other Tax Specialists are ready to help you

JustAnswer in the News:

 
 
 
Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.
 
 
 

What Customers are Saying:

 
 
 
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
< Last | Next >
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
  • I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight. Bonnie Chesnee, SC
  • Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation. John Minneapolis, MN
  • Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with. Orville Hesperia, California
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C. Freshfield, Liverpool, UK
  • This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex Los Angeles, CA
  • Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult. GP Hesperia, CA
 
 
 

Meet The Experts:

 
 
 
  • Wallstreet Esq.

    Tax Attorney

    Satisfied Customers:

    570
    10 years experience
< Last | Next >
  • http://ww2.justanswer.com/uploads/KU/KUMI95/2013-9-30_195031_kumar.64x64.jpg Wallstreet Esq.'s Avatar

    Wallstreet Esq.

    Tax Attorney

    Satisfied Customers:

    570
    10 years experience
  • http://ww2.justanswer.com/uploads/CU/Cuttinggirl/2011-10-29_03719_wcrop2.64x64.jpg Wendy Reed's Avatar

    Wendy Reed

    Enrolled Agent

    Satisfied Customers:

    3052
    15+ years tax preparation and tax advice.
  • http://ww2.justanswer.com/uploads/CATax/2009-08-04_204548_Mark.jpg Mark D's Avatar

    Mark D

    Enrolled Agent

    Satisfied Customers:

    985
    MBA, EA, Specializing in Business and Individual Tax Returns and Issues
  • http://ww2.justanswer.com/uploads/IN/insearchoftheanswer/2013-8-16_0233_attorney.64x64.jpg Richard's Avatar

    Richard

    Tax Attorney

    Satisfied Customers:

    3229
    29 years of experience as a tax, real estate, and business attorney.
  • http://ww2.justanswer.com/uploads/MY/MyVirtualCPA/2012-7-5_44024_cookmegan1.64x64.jpg Megan C's Avatar

    Megan C

    Certified Public Accountant (CPA)

    Satisfied Customers:

    6121
    Licensed CPA, CFE, CMA who teaches accounting courses at Master's Level
  • http://ww2.justanswer.com/uploads/JG/jgordosea/2012-6-7_43138_GordosVeritas.64x64.jpg jgordosea's Avatar

    jgordosea

    Enrolled Agent

    Satisfied Customers:

    2783
    I've prepared all types of taxes since 1987.
  • http://ww2.justanswer.com/uploads/OZ/ozaukeecpa/2012-6-7_193219_Picture1croppedandshrunk.64x64.jpg MequonCPA's Avatar

    MequonCPA

    Certified Public Accountant (CPA)

    Satisfied Customers:

    2231
    CPA, Over 30 yrs experience w/individuals and small businesses. Masters in Tax.