Have a Tax Question? Ask a Tax Expert
Thank you Shawn. I was told in the past by a CPA that 'initial' training costs to start a new business (like the cost of going to real estate school for example) cannot be deducted.... but thereafter.. the continuing education WAS deductable. Similarly, I read the following answer to this question on the internet:
I have read the other responses, before me, but I have to add a caveat. If the professional license is the original, or first, license in your new profession, it is not deductible. For example, my first CPA license, as I recall, was $50 (does that age me?), and it was not deductible. If the professional license is a renewal, yes, it is deductible, as my Yahoo colleagues have suggested. Phillip S Foster CPA Dave Ramsey Endorsed Local Provider..
OK.. so the lady in London is giving me a 'training'.. and her approval i.e. 'license' to use her name and method' (which I would say is selling me a 'franchise') so I am confused about what should be on the receipt.. to make sure it is legally tax deductable.
It needs to be made out in the name of the business, dated, the amount clearly stated, and the reason (explnation for the payment), as well as being on their letterhead.
Then of course if you are ever audited, you have the receipt.
Just to be clear that an itial franchise fee is deductible please see the link: http://www.irs.gov/publications/p535/ch08.html#en_US_2011_publink1000208966
This is from IRS publication and if you look at section 179 depreciation ist clearly states that the "..initial franchise fee is subject to amortization over 180 months . Thus you CAN CLEARLY take the initial franchise fee and expense it over 15 years!!!
If this does not answer your question please let me know. Also let me know if you have additional questions.
This is my full time job and I only get paid if you accept my answer. We work on the trust system at JA.
If you understand my answer and have no more questions, please accept and please eave positive feedback (if so inclined). Thank you.
I have another question regarding our previous conversation. I went to London and took the course. I understand that 'start up' fees or 'capital expenditure' can be written off at up to $5,000.
the first year and the balance amortized over the next 15 years.
OK, I got that. I had to take $27,000 out of my retirement account to pay for this (SEP). Of course that withdrawal is considered income.. and I have to pay the tax on it. My question: Because the new business is 'facial fitness'.. and I am already in the 'health industry'.. is there a way that this could be considered a business expense by way of 'expansion' of my current business.. allowing me to write off more of the cost at one time? Other wise I have to pay a lot of taxes on April 15th. The only way I would be able to cover the additional taxes.. will mean selling more of the shares in my SEP.
I began a conversation with an accountant on this site by the name of Shawn Adamo in April of this year, on this site. I ask him a follow up question a week ago.. and he has not answered.
I truly hope this information is helpful but please do not rate until you are satisfied. If you want to click on 1 or 2 just click on the continue to work with me button instead. You will then be able to add any other info or respond to what I have posted so far. Rating 3-5 gives me credit and a good rating but you can still converse with me.
I don't understand your reply very well. In one paragraph you say 'you can't find anything that would prevent me from writing off my expenditure in full.. the year I incurred them', but my expenditure was $27,000 not $5000. I am trying to find a way to write off more (legally of course).
Is the allowable tax deduction for funds used to 'expand' an existing business.. different than funds
used to start up a 'new' business. I read the rules for IRS 535 .. but am not sure if there is a difference.