Ten Forty + Quality Tax Preparation & Financial Services 281-397-7777 Fax 281-397-7443 Tax Tip Kick-start deductions for a new business Did you launch a new business venture before the end of 2016? If so, you've probably spent money getting ready to open your doors. Normally, if you had no sales before 12/31/16, you're required to amortize these "startup" costs over a period of 180 months, starting with the month your business begins. That time period means you'll typically write off your initial expenditures in 15 years. However, under a special provision of the tax code, you can expense up to $5,000 of the costs in the year you begin business, with no waiting. To benefit from the break this year, your business must be in operation before January 1, 2017. Depending on the type of business, if you open the doors to customers or allow online sales around the holidays, you'll most likely qualify. What expenses are eligible for the immediate deduction? The general rule is that qualifying costs are investigatory or the kind you'd be able to deduct if the business was already operating. Examples of investigatory costs include an analysis or survey of potential markets, products, and labor supply. Qualifying costs that you incur before beginning operations include ads for your business opening, salaries and wages for employees who are being trained, and consultant fees. Be aware that the $5,000 current deduction is reduced on a dollar-for-dollar basis when startup costs exceed $50,000. For example, suppose you sink $53,000 into a new venture that begins doing business before the end of the year. As a result, the current deduction is reduced to $2,000 ($5,000 - $3,000). The remaining startup expenses must be amortized under the usual rules. Tax season is here. Go to www.tenfortyplus.com and complete your online organizer (under forms and documents). Make your appointment using our online appointment system. Call 281-397-7777 and get a user id with password set up so you Regards, Joseph C Becker EA www.tenfortyplus.com 281-397-7777, Fax 281-397-7443 joeb@tenfortyplus.com Contact Us There are many events that occur during the year that can affect your tax situation. Preparation of your tax return involves summarizing transactions and events that occurred during the prior year. In most situations, treatment is firmly established at the time the transaction occurs. However, negative tax effects can be avoided by proper planning. Please contact us in advance if you have questions about the tax effects of a transaction or event, including the following: • Pension or IRA distributions. • Retirement. • Significant change in income or • Notice from IRS or other deductions. Revenue department. • Job change. • Divorce or separation. • Marriage. • Self-employment. • Attainment of age 59½ or 70½. • Charitable contributions • Sale or purchase of a business property in excess of $5,000 • Sale or purchase of a residence or other real estate.