Should I claim business expenses on a store I didn’t open?
Tags:business expenses, general contractor, own business, store location, thousands of dollars,
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I worked as an worker from Jan-Sept with a association in 2006. we left this association in Sep to open my own business. we outlayed thousands of dollars towards opening my store, which we was ostensible to open upon Dec 5, 2006. Due to a little vital issues with my General Contractor, we was incompetent to open my store in 2006. we still have not non-stop it. we have had my store place leased given October, 2006.
My subject is this…
Since we did not embrace a singular dollar in sales from my store in 2006, do we explain all of my losses towards it any way (we’re articulate about in additional of ,000), or do we only record my income from a pursuit we had from Jan-Sep, as well as explain my commercial operation losses upon my 2007 taxes given we will be open which year?
Please suggest if we know how we should hoop this. Thanks.
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You must capitalize your startup costs. Once you start earning money on the business you can expense the startup costs. You can NOT take any business deduction for those costs in 2006.
Consult with a CPA for advice; you need professional assistance.
The loss can be claimed in the year it was lost. Some may carry over into future years. I recommend to clients that they only claim losses for what they have receipts for (this is a good rule even if you do not have a business.) If you get audited, which w/ $0 income you will, it is necessary to have proof of everything you claim. So you would claim the loss this year, just be sure you have proof.
Claim the expenses that you incurred in 2006 on your 2006 tax return. Since you don’t have revenue, all of the expenses will become your total loss for the year. If you have taxable income next year from the business, you can reduce it by the loss "carried over" from 2006. I think it’s called NOL net operating loss.