Foreign Busisness Expedition Travel Expenses

My guess is that none of your expenses to investigate work will be currently deductible. Instead they would be capitalized and written off after you actually get into business. If you are an artist or writer the answer might be different.

Stu

Your friend is wrong. There is no "might" about it. Such expenses are not deductible if you don't buy or invest in a business. Also, it is Congress, through the Internal Revenue Code, that created this rule, not the IRS.

Here is a quotation from the Tax Court case Frank v. Commissioner, 20 T.C. 511 (1954): "The travel expenses and legal fees spent in searching for a newspaper business with a view to purchasing the same cannot be deducted under the provisions of [the predecessor to section 162]. The [taxpayers] were not engaged in any trade or business at the time the expenses were incurred. The trips made by the taxpayers from Phoenix, Arizona, were not related to the conduct of the business that they were then engaged in but were preparatory to locating a business venture of their own. The expenses of investigating and looking for a new business and trips preparatory to entering a business are not deductible as an ordinary and necessary business expense incurred in carrying on a trade or business. George C. Westervelt, 8 T. C. 1248. The word "pursuit" in the statutory phrase "in pursuit of a trade or business" is not used in the sense of "searching for" or "following after", but in the sense of "in connection with" or "in the course of" a trade or business. It presupposes an existing business with which petitioner is connected."

But aren't preparatory expenses capitalized and depreciated?

Stu