Chapter 5

Chapter 5 - Ex> you have 23,000 (start cost)...

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Chapter 5 If you not in a trade business, you can not deduct these cost. However, if you go into a trade in business, then those cost can be deducted once trade business begin, but not until the trade business begins. Cost that would be ordinary and necessary expense deduction. If you were in a trade business – can not deductible because you are not in a trade business. You start the trade business, then you can start to deduct. The way these rules work is Once the trade business begins, you can deduct immediately 5,000 these cost and you can amortize the remain your access 5000 over 180 months for 15 years periods.
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Unformatted text preview: Ex> you have 23,000 (start cost) Business begin Oct 1, In your first year : When you 23,000 tax return for the 3 months, you deduct immediately 5,000 The total deduction the first year 5,000 immediately deduction + 300 (amortize monthly basis) In the following year, you amortized over 15 years on the following year you will be allowed $1200 deduction. Suppose you go out the business, before amortization period is done: Is that any unamortized cost -> immediately deduct in the year that you go out the business That means you incentive f...
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