"JanZtax" <janztax[at]aol.com> wrote:

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Only for startup costs paid or incurred after
October 22, 2004.

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Actually, new tax law allows business owners to deduct up to
$5,000 in start up expenses in the year the business starts.

--
Jan Zobel EA, author of 'Minding Her Own Business:
The Self-Employed Woman's Guide To Taxes and Recordkeeping'

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Michelle Kapp wrote:

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That depends on what you mean by "started up." (See last
paragraph below.)

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Cost recovery (aka depreciation) starts when the equipment
is placed into service.

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The lesser of cost or fair market value on the date
converted to business ues.

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Yes.

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Maybe, maybe not.

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To maximize your chances of not losing any deductions you
should consult with a local tax professional (CPA or EA) who
specializes in small businesses. I suggest you do this soon
-- before tax season gets started.

Some (many? most?) of the costs you describe will be
amortized over 60 months once you start operations. A
competent tax advisor can help you with that.

Good luck.

Regards,
Bill

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New Schedule C business - making custom guitars. Had many
costs in 2004 but have not sold a guitar yet. It takes
several months to make one. Costs so far have been
materials, advertising, equipment, and small mileage.
1 - Is the business started up in 2004 even though a sale
has not happened?
2 - Equipment purchased depreciated this year?
3 - What is the basis of personal equipment brought into
the business?
4 - Materials for the guitar in process would be inventory
5 - Maybe we don't really have "start up costs", except
maybe the advertising....

Thanks for your help. Don't want to lose any of these
deductions.

Steve

================================================== ==========
Moderator:
My younger son just purchased a "Les Paul Classic" mostly
with his own savings. We call him "Joshua De Miser". He
might be in the market for a custom made in 4-5 years.
================================================== ==========

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