Are search expenses deductible?

by a searcher from Saint Louis University

1 year ago

I'm running a part-time, self funded search and have created an LLC to acquire a company. Are there any expenses that I can deduct as a business operating expense before I close the deal? For example, can I deduct due diligence costs, website fees, cell phone bills, etc. to offset my income this year from the w-2 job?

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searcher

Some are and some are not, its best to consult and CPA and Tax Strategist for this. I say both because they tend to balance each other out for making the best decisions in your favor while still legally complying.

1 year ago | like reply | 0 likes

professional from Walsh College of Accountancy and Business Administration

Search expenses are required to be capitalized for tax purposes under sections 195, 709 (partnerships) and/or 248 (corporations). The capitalized costs are then amortized once the acquisition is made because this is when the trade or business begins. Due diligence and deal fee expenses are governed by section 263 and specifically Treas. Reg###-###-#### a)-4 and -5. For the first acquisition, these costs are capitalized and may be depreciated/amortized, depending on the structure of the acquisition.

1 year ago | like reply | 3 likes

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