Tax Tip 2021-166: Here’s how businesses can deduct startup costs from their federal taxes
Internal Revenue Service (IRS) sent this bulletin at 11/09/2021 10:00 AM EST
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Issue Number: Tax Tip 2021-166Here’s how businesses can deduct startup costs from their federal taxes
For costs paid or incurred after September 8, 2008, the business can deduct a limited amount of start-up and organizational costs. They can recover the costs they cannot deduct currently over a 180-month period. This recovery period starts with the month the business begins to operate active trade or as a business. Business start-up costs Start-up costs are amounts the business paid or incurred for creating an active trade or business, or investigating the creation or acquisition of an active trade or business. Start-up costs include amounts paid or incurred in connection with an existing activity engaged in for profit, and to produce income in anticipation of the activity becoming an active trade or business. Qualifying costs A start-up cost is recoverable if it meets both of the following requirements:
Start-up costs include amounts paid for the following:
Nonqualifying costs Purchasing an active trade or business
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