Thinking of starting a new business? Before you get ahead of yourself and start making purchases, read this.
In 2010 an airline pilot purchased a plane to start a side business. Even though she had done her research into what her rates could be and made a business plan, she never advertised nor did she have any clientele.
The Tax Court has ruled that if you intend to start a business, but don’t actually participate in any trade, you cannot deduct your expenses. Since she did not take that next step in that calendar year to go from planning to obtaining clients, she could not deduct the cost of the airplane.
What does this mean practically? If you are starting a new business, but won’t be able to make the next step toward gaining clientele until the next tax year, you should hold off on any large purchases.
Don’t go it alone! We specialize in small business. Let us help you start your new business off on the right foot. Call us to make an appointment today!
In 2010 an airline pilot purchased a plane to start a side business. Even though she had done her research into what her rates could be and made a business plan, she never advertised nor did she have any clientele.
The Tax Court has ruled that if you intend to start a business, but don’t actually participate in any trade, you cannot deduct your expenses. Since she did not take that next step in that calendar year to go from planning to obtaining clients, she could not deduct the cost of the airplane.
What does this mean practically? If you are starting a new business, but won’t be able to make the next step toward gaining clientele until the next tax year, you should hold off on any large purchases.
Don’t go it alone! We specialize in small business. Let us help you start your new business off on the right foot. Call us to make an appointment today!
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