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Income tax rules apply to expenses that are incurred and paid before a business exists. These expenses are referred to as “start-up expenditures” or “start-up costs.” The IRS provides guidance relative to the deductibility of these start-up costs for any individual or entity beginning a new business, such as a farm. These rules apply regardless of the nature of the business or the organizational structure ultimately used in operating the new business. A challenge for the beginning business owner is to identify the “start date” of the business. Expenses incurred prior to the start date are generally considered start-up expenses, to which the IRS rules apply.
Rural Tax Education
start-up, reporting, farmers, income tax
Education | Higher Education | University Extension
van der Hoeven, Guido, "Start-Up Costs: Correct Reporting by Farmers for Income Tax Purposes" (2016). Rural Tax Education. 4.