The US Tax Aid blog on December 31, 2020 talked about what it takes for a business to get a tax deduction. If you missed it, please go back and take a look at it.
A recent Tax Court case (Primus, TC Summ. Op. 2020-2) dealt with a case that is really similar to the 4 points I talked about in the blog.
In this case a taxpayer bought land with maple trees in place and some fields that could be planted. He wanted to produce maple syrup and grow blueberries on the fields. In the tax year, he cleared the fields so he could plant the blueberries and got other infrastructure in place.
But he didn’t begin to collect the syrup. He didn’t plant and pick blueberries.
In other words, he didn’t start, he only prepared to start.
That meant nothing was deductible.
Once the business starts, he can make an election to deduction $10,000 of the pre-opening costs and amortize the rest over 180 months.
You don’t lose the deduction for the cost. But it’s delayed until you start.
So, what is the thing that the taxpayer needed to do?
He needed to start.
If you want to pay less in taxes, you need a business.
I’m going to be focusing on online businesses this next year.
First, START ONE!
I like online businesses because you can honestly start one in an evening or at least a weekend. Not sure how? Come to FACEBOOK GROUP LINK and follow along with the Steps to Success. It’s free.
Then once you start, go back to the December 31, 2019 blog to read the 4 steps.
Make sure your CPA knows how to find all the deductions you have available.
When your income kicks up, you’re ready for a customized tax strategy. Give us a call at 888-592-4769 and we can talk about how we can help with strategy, implementation and tax filings. We also offer bookkeeping services and IRS and state audit support.