Thomas Healy wrote:
- quote -

Yea, but these "start up" expenditures sound to me more like
product development and to be capitalized.

Also in this case, sounds like nothing has even been done as
far as 1120S preparation. After all, it's ONLY Feb 23rd!
(grin

ChEAr$,
Harlan Lunsford, EA n LA
Wed 23 Feb 2005

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"Pete" <petemccarthy[at]gmail.com> wrote:

- quote -

Spend some money on an accountant. None of your expenses
are deductible and if they were, it would be 50/50.

--
David M. Woods, EA, ChFC, CLU
Woods Financial Services
Norwood, MA 02062
www.woods-financial.com

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Pete wrote:

- quote -

From the way you describe it, all these expenditures sound
like development costs before you start actually DOING
business. hence they are capitalized and amortized over time
when income begins.

No immediate tax deductions to either of you.

ChEAr$,
Harlan Lunsford, EA n LA
Mon 21 Feb 2005

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Pete wrote:

- quote -

Get yourself to a qualified professional tax preparer ASAP.
S corporations are complex and it is easy to make costly
mistakes.

Presumably you have enough basis in the corporation to be
able to deduct currently any loss that is distributable to
you, assuming that you are active in the business. You need
professional help to determine what corporate expenses are
currently deductible and what, if any, must be capitalized.
You are entitled to 50% of the corporation's current year
loss; the other 50% goes to the owner of the other half of
the stock. Whether that person can deduct the loss depends
on whether he or she is a passive or active investor, and
how much basis he or she has in the corporation.

We can't answer your questions because we don't have enough
information. This is not a do-it-yourself project. Get
professional help.

Katie in San Diego

The foregoing is intended for educational purposes only and
does not constitute legal or professional advice.

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"Pete" <petemccarthy[at]gmail.com> wrote:

- quote -

That depends on what the Schedule K-1 shows, and the nature
and timing of the expenses. For example, startup costs
before mid-October have to be capitalized; they can start to
be written off over 5 years once the company is "open for
business." After mid-October the first $5,000 of startup
costs can be written off up front, with the rest written off
over 15 years. Equipment is subject to depreciation, etc.
Once you have the actual allowable loss, it gets divided
50-50 with your other owner. Since you put up all the money,
you get to deduct your share; the other owner will have a
loss limit calculated on Form 6198, and will be able to
deduct zero.

--
Tom Healy, CPA
Boulder, CO
Web: http://www.tomhealycpa.com

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Bear with me because I'm very new to this. I am 50/50 owner
in an S-corp that is an internet startup. We have zero
income for 2004 and about $9000 in expenses. I have
invested 100% of the capital to fund the business. All of
the expenses have been for professional web development,
trademark, and other misc. fees. Can I use the money I
invested in the S-corp as a deduction in my 1040. If so,
can I use 100% of it or only 50% since I am only 50% owner?

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