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How Much Can a Business Claim in Business Expenses if They Have No Revenue Yet?

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Gary Milkwick, Tax Pro


How much can a business claim in business expenses if they have no revenue yet?

– Crystal S.


Gary Milkwick from Corporate Tax Network:

The answer is it depends.

If this is a hobby, losses are deductible to the extent of the income, on Schedule A, Itemized Deductions on your personal tax return.

If you incurred expenses for a business that is still in the start-up stage, but is not yet active, you can claim start-up expenses up to $5000 in the year in which the business becomes operational. Any excess start-up expenses would be amortized over 15 years.

If your business is active, but you just could not generate any revenue because of the economy, you can still claim your expenses. Expenses have to be reasonable and necessary for operating your business.

Here is a link to the IRS business Expenses Publication 535 for more information:

Gary Milkwick from Corporate Tax Network answers your tax questions for free on our Facebook page every Thursday at 11 a.m. PT.


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November 7th, 2013 at 9:49 am

Posted in Ask The Tax Pro

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