deduction of expenses

Question about deduction of expenses

Can investment/cost incurred in running a sole proprietor business be deducted as an expense ?

Reply to
mikefields2
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wrote

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.

Reply to
Paul Thomas, CPA

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