Expenses in the start-up phase of a business are not always deductible right away. According to the Tax Court: in a recent case, an engineer who was a full-time employee and was also in the process of opening his own company.
He visited construction sites after work to hand out business cards and promote his firm, and he set up a website. But he had no clients or income and didn’t bid on jobs during the years under audit.
Because his business wasn’t operating as a going concern, the expenses he reported on Schedule C are nondeductible start-up costs
Tarighi, TC Summ. Op. 2015-28
Firms can elect to write off up to $5,000 of start-up costs in the first year they actively engage in business. Any remaining amount is amortized over 15 years.