In setting up a small home business, are any 2007 expenses deductible if there has yet been no profit?

We paid for a 25K workshop and about 5K worth of tools this year for a stained glass workshop to produce sellable items. How do we go about deducting these expenses... do we set them up on a depreciation schedule? Sorry for the naive question but this is all new to me.

I am just looking for a general indication of how to proceed, not specific tax advice. I will go to a CPA but just need a clue.Thanks. Asked by Thannisan 46 months ago Similar questions: setting small home business 2007 expenses deductible profit Business.

Similar questions: setting small home business 2007 expenses deductible profit.

Yes, you do not have to make a profit to note the losses on your tax return. There only has to be the potential and anticipation of future profits. As for your specific deductions, you can normally depreciate the entire amount of tools and machinery in the same year they are purchased, up to $100,000.

I am not sure of your workshop would fall in this category. It may be your choice as how you categorize it, and your CPA can advise you as to your options. It may be more advantageous for you to spread the depreciation over several years to offset future profits.

I hope this helps. Sources: Have 2 home businesses .

Do go to a CPA... He or she will give you a better answer than anyone here, simply because they will be able to ask you relevant clarification questions. Generally speaking, though, you will need to depreciate the workshop. As to tools, you may (or may not) be able to expense them.

Since you had no profit, you should be able to "carry forward" your losses (i.e. , reduce your taxable profits in the future years by the amount of losses you've had in the past). Your accountant should be able to explain to you how it works and what the documentation requirements are..

1 power tools depreciate... hand tools do not... make sure when you meet with your accnt you break you tools down this way.

Power tools depreciate... hand tools do not... make sure when you meet with your accnt you break you tools down this way.

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