Expenses incurred before a business commences aren’t deductible, an appeals court confirms in this case in which an inventor deducted costs for a venture formed to manufacture and market a device to enhance television viewing.

Although time and money were spent developing the device, business hadn’t yet begun. The venture was still in the premanufacturing phase (Provitola, 11th Cir.).

Note that once the business begins, firms can make an election to deduct $10,000 of the pre opening costs and amortize the remaining expenses over 180 months.

Small Business Tax Strategies
July 2021