software purchase as business start up costs

[POCAHONTAS]

Before client started his energy drink sales business he purchased for $4,750 software and websites and online tools on how to get his business going, Can he deduct this cost on Schedule C line 27 as Business start up costs?

thanks

[ChEAr$]

Before client started his energy drink sales business he purchased for $4,750 software and websites and online tools on how to get his business going, Can he deduct this cost on Schedule C line 27 as Business start up costs?

thanks

You might want to check for sure, but I think software can not be subject to sec 179.

[POCAHONTAS]

pub 946 page10

Computer software is a section 197 intangible and cannot be depreciated if you acquired it in connection with the acquisition of assets constituting a business or a substantial part of a business.

However, computer software is not a section 197 intangible and can be depreciated, even if acquired in connection with the acquisition of a business, if it meets all of the following tests.

It is readily available for purchase by the general public.
It is subject to a nonexclusive license.
It has not been substantially modified.

If the software meets the tests above, it may also qualify for the section 179 deduction and the special depreciation allowance, discussed later. If you can depreciate the cost of computer software, use the straight line method over a useful life of 36 months.

so the above means that it can be subject to section 179 deduction and can go on schedule C line 27 other expense correct?

[Lion]

Depreciation Schedule

Don't know your software, but it goes where you enter depreciable assets.

Only items that would be normal operating expenses once business is open, would be start up expenses prior to that date, per the things you were mentioning like pre-opening training and utilities and... Things that he would normally depreciate or amortize still get depreciated or amortized.

[POCAHONTAS]

My software is awful, and I have lost clients because of it and will no longer be using it.

client would continue to use the software for his business so I am thinking that it would be a start up cost, so he says therefore I have documented it .

[Lion]

Depreciation

Things that you depreciate or amortize are not start-up costs, you depreciate or amortize them. Things that would be ordinary expenses if you were open for business, payroll for instance, can be a start-up cost if you're paying your employees for training prior to opening.

[S T]

Software

I thought that Specialty Software to the Owner's biz was set up as being depreciated/amortized over 3 years.

If off the shelf software, longer .

The link I am posting obviously is not "cite" but provides some insight for you to determine where the software deduction might fit.

http://www.poznaklaw.com/articles/compusoft.htm

Sandy