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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 10100
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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I have a client who has two LLC's. He eventually wants to

Customer Question

I have a client who has two LLC's. He eventually wants to build a new business and shut down the other two businesses. He has some start up expenses for the new business that he is paying for with both LLC's income. Can he deduct the start expenses for the new business from his LLC? If not, how can he claim the start up business expenses for the new business that is not yet operational ?
Submitted: 5 months ago.
Category: Tax
Expert:  Lane replied 5 months ago.

Hi,

...

Yes he can. However, this may not be immediate gratification ... meaning,

...

You can't deduct these expenses under th general rules for business deductions (IRC §162) because only expenses for an existing trade or business can be deducted. And, by definition, you incur your startup expenses prior to the time that your business is born.

...

However, if your startup expenditures actually result in an up-and-running business, you can do the following:

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  • deduct a portion of the costs in the first year and
  • amortize the remaining costs (that is, deduct them in equal installments) over a period of 180 months, beginning with the month in which your business opens.
Expert:  Lane replied 5 months ago.

Did you see my answer?