I read on the IRS website that you can deduct up to $5000 worth of startup expenses in the first year and amortize the rest over the next 180 months. They define startup expenses as costs before your business is operating.

If I formed an LLC as Sole Proprietor in October of 2014 but the LLC did not actually start operating until February of 2015. Could I deduct the first $5000 in 2015 instead of the 2014 tax year?

As an fyi, I did not make any income in 2014 but did have startup expenditures during that year.

I read on the IRS website that you can deduct up to $5000 worth of startup expenses in the first year========>>It depends ;assume that you started your business in 2015, had startup costs of $50K or less, and incurred startup expenses, after Oct. 22, 2004, you can deduct up to $5K in business startup costs on your tax return. If those startup costs exceed $50K, the $5K first-year deduction is reduced dollar-for-dollar by the amount your expenses exceeded $50K. Furthermore, if your start-up expenses exceed $55K or more, you won’t be able to claim the $5K deduction for the first year.
For example, if start-up costs are $51K, the deduction is reduced to $4K. If start-up costs are $55,000 or more, then, you need to capital;ize the cost for the next 180 months.


and amortize the rest over the next 180 months. ===.Correct as said above.

They define startup expenses as costs before your business is operating.==>Correct; “startup costs” are deductible capital expenses: costs incurred for surveying markets, product analysis, labor supply, visiting potential business locations and similar expenditures.
However, biz equipment purchases are not listed here. It’s very likely that you purchased equipment before opening your business; however, these are not considered startup expenses and instead can be written off through depreciation, with different rules for different assets.
Other Startup Deductibles – Organization Costs


If I formed an LLC as Sole Proprietor in October of 2014 but the LLC did not actually start operating until February of 2015. Could I deduct the first $5000 in 2015 instead of the 2014 tax year? =======>>yes on your 2014 return when you started your return.As an owner of SMLLC ,, you can not claim organizational costs UNLESS your biz is incorporated as S or C corp.

As an fyi, I did not make any income in 2014 but did have startup expenditures during that year===>A said above, you may deduct the costs when you ACTUALLY started your biz.

Since I did not make any income in 2014 but formed an LLC in 2014, I am still required to fill out a Schedule C. If schedule C is in regards to doing business, and I did not have a business until 2015, then I would think that I would not include any business expenses in 2014. All startup expenditures ($20,000) would be carried over to 2015 as startup deductions.

Is this correct?

#1Correct; aslongas your business has more expenses than income during its tax year, then you may have a net operating loss
you still NEED to file your Sch C of 1040 to claim your NOL;NOL can be used to offset income in other years. If the loss is carried back, it is used to offset the taxable income of previous 2 years, with the earliest year offset first. If the loss is not fully used up in the carry back years, any unused portion of the loss may be carried forward for up to 20 years after the NOL year. Any NOL that is not used up in the carryover period is lost.


#2 I think so.

#3Correct