Never had one like this. He is farming in a non-treaty country. Bought all his equipment and seeds in 2012, but didn't start farming activity until 2013. Still has no income from farming. Any one got any ideas? I would really like to write some off in 2012, but I'm not even sure that would work without a tax treary.
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A U.S. citizen earning income in a foreign country must report that income regardless of whether or not the U.S. has a tax treaty with that country.
In your case, if the activity did not start until 2013, you have to capitalize all start-up costs prior to the beginning date of the business under the normal start-up cost rules (see Tab 8 of TTB). Start-up cost rules apply regardless of whether or not the business activity is in a foreign country. -
So he is allowed to amortize all the start up costs in 2012 even though he has no income in that year?Comment
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No, read the start-up cost rules in Tab 8 of TTB. Amortization (or the expense election) does not begin until the business activity begins.Comment
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And those rules apply to farming also? I really didn't think there was anyway to write off anything until there was income, but I was hoping.Comment
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If the farm activity is a business, then yes, the start-up cost rules apply to farming as well.Comment
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