Business Tax Write-Offs (Claiming Real Estate Educational Expenses w C Corp!)


(techno sounds and music) – My husband and I have
been incurring educational and coaching expenses
for our new real estate, probably new real business,
real estate business. We will not earn any income this year. So I’m assuming they’re talking about the real estate business. – We like real businesses. – Yeah, this is a real business
as apposed to a fake one. However, we want to be able
to deduct the expenses. I understand we need to create
a C-Corp in order to do this. And we’ll explain why you’re
probably hearing that. Is that a 195, startup expenses? – Right. – My question is, does the
C-Corp have to be setup in 2018 in order to carry forward
the deductions to next year? The answer is no. Or can we wait until 2019 to
setup the C-Corp and still apply the expenses from 2018
to offset the 2019 income? Well here’s how it works. Just cause you pay for
something during a tax year, does not make it applicable as a deduction in that particular year. When it’s a startup
expense, what we’re doing is anything that’s in the
investigation or the creation of your business, is captured
as a startup expense. It’s actually a 26 COC 195,
and what that allows you to do is go back in time and grab
things that would have been deductible to the business
had it been in existence, but knowing that the
business is not in existence, we’re getting it ready to go. You’re able to go back and
grab those, and then you can write off up to $5000 in the
first year of the business, but you amortize the rest over 15 years, unless it’s over $50,000. If it’s over 50, then we’re
amortizing over 15 years without regard to the $5000 bonus. I know that sounds complicated, what it means is it really depends on how much you’re spending. If you’re spending a few thousand bucks, getting some coaching
then don’t worry about it. If you’re spending more then
you better get set up sooner than later unless you want to
just be taking portion of it. One-fifteenth every year, so if you spend $60,000, you’re taking… – $4000 – $4000 a year as a deduction. So it helps, you’re writing it off, but you’re writing it off
over a longer period of time. Hope that helps, if you’re
a few expenses, wait. If you’re not, get it going
really quick, because we want to capture those as ordinary expenses, which means we may look
and say what’s the value of what you’ve already paid for. Expense that as a startup
and look at the value of everything you still got, and expense that as
ordinary expense right away. The other thing is C-Corps
don’t have the same tax year, so 2018 for the C-Corp could be next year. – Right. – If we set it up now and
we have a taxable year end, and at the end of November,
it’s still a 2018 expense. Sounds weird but it would be
all the way in November 2019, and you’d be filing
your tax return in 2020, but the expense would be from 2018. I love just trying to confuse
the crud out of people. (light music)

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