Schedule C education for startup

Situation: TP in her 60's has started an internet marketing sole proprietorship. She went back to school, spent $20k remotely at USanFran.

Can that be used as:

---deduction? whether expensed or amortized...

---credit? such as the LLC...

---or not at all?

I'm quite familiar with the regular credits, as well as the Sched A potential for employee business expenses, but this one's throwing me off a bit. Her argument for it is that she is not starting a new busi

Reply to
Chuck
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"Chuck" wrote

More facts would be nice, but right now, I just don't see it as an ordinary and necessary business expense.

Reply to
paulthomascpa

Education that qualifies you for a new career doesn't qualify as a deductible business expense under the "old" rules. You may be able to claim the expense under one or more of the newer education expense/credit rules.

Ira Smilovitz Leonia, NJ

Reply to
ira smilovitz

Did she start the business before going to school? If she's already open for business and trying to find customers, and hopefully has some customers, then the educational expense is allowed as a Schedule C deduction because she's already in the new field.

If she was not open for business, and the education is for the same field she is doing now, then I think this is deductible as a startup expense and amortized over 15 years.

If she was a W-2 employee in the field of internet marketing, then she can deduct on Schedule A subject to limits -- the 2% rule and AMT.

Otherwise she must deduct as a Lifetime Learning credit, or tuition and fees deduction. She can still deduct this way in lieu of Schedule C and Schedule A. But there are income limits, phaseouts.

What LLC are you talking about?

If her business is a corporation it can deduct 5250 of educational expenses and she the employee does not have to include this in her income. I don't know if an LLC can do this.

Reply to
removeps-groups

business and trying to find customers, and hopefully has some customers, then the educational expense is allowed as a Schedule C deduction because she's already in the new field.

is doing now, then I think this is deductible as a startup expense and amortized over 15 years.

deduct on Schedule A subject to limits -- the 2% rule and AMT.

deduction.  She can still deduct this way in lieu of Schedule C and Schedule A.  But there are income limits, phaseouts.

and she the employee does not have to include this in her income.  I don't know if an LLC can do this.

Note that the costs associated with obtaining a bachelor's degree are not deductible as a business expense by on the theory that a B.A., B.S. etc. qualifies the student for at least one new trade or business. Certain reimbursements of those costs (scholarships, employer) are excludible but that is not the TP's situation.

Reply to
Bill Brown

and she the employee does not have to include this in her income.  I don't know if an LLC can do this.

Unfortunately, that is not correct unless her controlled corporation is reimbursing unrelated employees at least $99,790 for their education costs.

Remember Ren TTP?

Reply to
Bill Brown

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