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Posted by mikefields2@gmail.com on February 12, 2008, 8:51 am
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Question about deduction of expenses
Can investment/cost incurred in running a sole proprietor business be
deducted as an expense ?
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Posted by Paul Thomas, CPA on February 12, 2008, 9:08 am
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> Question about deduction of expenses
>
> Can investment/cost incurred in running a sole proprietor
> business be deducted as an expense ?
Indeed, it is.
Expenses incurred in operating a sole-proprietor business are generally
reported on Schedule C, where by the way, they are deducted against the
sole-proprietor's income from sales of goods or services. There are other
forms or schedules, 4562 to depreciate equipment, furniture, etc used in the
business, 8829 if you have a qualified home office related to the business,
are the two most commonly related forms or schedules.
Now, the money you put into the business isn't deducted, but what the
business spends is deducted, either as an operating expense currently, or
over time through depreciation of the equipment, vehicles or furniture. The
cost of inventory isn't deducted till you sell the inventory.
Business accounting and tax preparation can be quirky, so consult a local
CPA or EA for guidance (just let them prepare your returns, ok?). There are
probably some specific state or local tax matters that need to be addressed,
and they're best suited to do that.
--
Paul A. Thomas, CPA
Athens, Georgia
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<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>
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