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Megan C
Megan C, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 16576
Experience:  Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
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We are a small retailer business and needs to set up a subsidiary

This answer was rated:

We are a small retailer business and needs to set up a subsidiary company in China, we just wonder if the cost to set up this subsidiary company is considered business expense and could deducted for tax.

Megan C :

Thank you for your question. My name is XXXXX XXXXX I would be happy to help you today

Megan C :

How are you doing?

Megan C :

When you incur costs to setup a business, those are organizational expenses. These are capitalized and deducted over a term of 15 years.

Megan C :

Setting up a subsidiary is essentially setting up a new company

Customer:

Since we own the subsidary company, let us say we invested 100K to set up the manufacture facility, the shipping center, etc, and 100% own this company, so the 100K we invested this year is considered as the business cost and could be deducted from this years revenue for tax purpose, correct?

Megan C :

No, it's a setup cost for the new company. It would be organizational costs and would be deducted over 180 months

Customer:

which means it would be deducted like 7% each year, right?

Megan C :

Yes, that is correct. But, keep in mind that the cost of setting up equipment etc is capitalized as part of the basis in the asset

Customer:

magan, I need to leave now, can I catch up with yo a bit later. also can you tell me quickly how I pay you the $30.00. thanks

Megan C :

Yes, you can catch up with me later. You pay me the funds by rating me positive.

Megan C :

So, click 3-5 stars. You can come back to this page at any time to ask a follow up even after you rate.

Customer:

excellent,. thx

Megan C :

The rating feature is along the bottom of your screen

Megan C :

I'm also on about 18 hours a day so I should be here when you get back

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