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Author: ptheland Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121585  
Subject: Re: Schedule C is killing me Date: 3/11/2005 2:10 PM
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– Startup costs of up to $5,000 can be deducted instead of amortized if they were incurred after 10/22/04. Where do I deduct these? Schedule C has a ton of categories... none seem applicable.

Use the other expenses line and list the startup expense on the second page of sch C.

- Software: Startup Cost or not? This was about $4K for me so that would be a big deal if it means not dealing with depreciation.

If the software was purchased with the computer, it gets lumped with the cost of the computer and must be depreciated along with the computer. A separate purchase can be expensed if the software is only good for a limited time (like tax software which must be updated each year).

– How much does it matter if I get all the categories just right for expenses? Sometimes it is hard to tell where an expense belongs. (e.g. I bought a building code book which will be useless in a year or two, but it isn't quite a consumable "office supplies" item)

Not too much. Don't stress out over getting everything in exactly the right place. More important is to make sure the expenses are described reasonably so that an auditor can understand them, and that the expenses are properly deductible as an expense of the business.

Oh yes, I'd show the code book either as an office supply or as "books and periodicals".

--Peter
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