schedule C


A

Aaron Mallin

I am currently working as an accountant for a company. I am
studying for the CPA exam. After, I'm certified I hope to do
tax preparation and financial planning on the side for
individuals. I purchased a laptop in 2006 that I exclusively
use to study for the CPA exam and I plan on using for my
business when I become certified. Can I fill out a schedule
C to deduct the laptop expense from my taxable income even
though I have no gross receipts. From what I can as long as
I am profitable 3 out of 5 years I would be able to deduct
this. I hope to be profitable next tax season (in 2008) so I
think I could do this. Please let me know. Any advice would
be appreciated.

Assuming I can deduct the laptop, I believe I have a choice
of deducting it all now or deducting it over 5 years. I
would prefer to deduct it now. Is this correct that I am
able to deduct it 100% right away?

Thank you.
 
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B

Benjamin Yazersky CPA

Aaron Mallin said:
I am currently working as an accountant for a company. I am
studying for the CPA exam. After, I'm certified I hope to do
tax preparation and financial planning on the side for
individuals. I purchased a laptop in 2006 that I exclusively
use to study for the CPA exam and I plan on using for my
business when I become certified. Can I fill out a schedule
C to deduct the laptop expense from my taxable income even
though I have no gross receipts. From what I can as long as
I am profitable 3 out of 5 years I would be able to deduct
this. I hope to be profitable next tax season (in 2008) so I
think I could do this. Please let me know. Any advice would
be appreciated.

Assuming I can deduct the laptop, I believe I have a choice
of deducting it all now or deducting it over 5 years. I
would prefer to deduct it now. Is this correct that I am
able to deduct it 100% right away?
you can't deduct the entire cost of the laptop under section
179 if you have no income

___________________________________
<<< Benjamin Yazersky, CPA [NJ & NY] >>>
-----> real address on hobokeni or hobokenx <-----
 
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M

Mark X. Rigotti, CPA

Aaron Mallin said:
I am currently working as an accountant for a company. I am
studying for the CPA exam. After, I'm certified I hope to do
tax preparation and financial planning on the side for
individuals. I purchased a laptop in 2006 that I exclusively
use to study for the CPA exam and I plan on using for my
business when I become certified. Can I fill out a schedule
C to deduct the laptop expense from my taxable income even
though I have no gross receipts. From what I can as long as
I am profitable 3 out of 5 years I would be able to deduct
this. I hope to be profitable next tax season (in 2008) so I
think I could do this. Please let me know. Any advice would
be appreciated.

Assuming I can deduct the laptop, I believe I have a choice
of deducting it all now or deducting it over 5 years. I
would prefer to deduct it now. Is this correct that I am
able to deduct it 100% right away?
Wow - where to start.

You are not in business - YET. No deduction possible.
Perhaps a start up expense requering (SP?) capitalization
and amortization beginning when you begin business.

As an aside sir. There are so many very basic issues here
that I would strongly suggest you have a few more years
experience before you open your own practice.

I now remember why I waited until I had 10 years experience
before I opened my own practice and I still was not fully
prepared. I was an audit manager for an international firm
at the time and still recall the nightmares that doing
individual taxes caused me. I am sure that somewhere out
there (and I am sure many will agree) is some sort of
malpractice I committed unknowingly.

Actually, with the complexity of the IRC I still may be
committing malpractice and not know it. <BG> I guess that
is why running/owning a CPA firm is called practicing. We
keep practicing until we fianlly get it right and then we
retire. <BG> After 25+ years I guess I'll keep practicing
for awhile.

Hope that this helps.

Regards,

Mark Rigotti, CPA
(and still trying to get it right - all the time)
 
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B

Bill Brown

Aaron Mallin said:
I am currently working as an accountant for a company. I am
studying for the CPA exam. After, I'm certified I hope to do
tax preparation and financial planning on the side for
individuals. I purchased a laptop in 2006 that I exclusively
use to study for the CPA exam and I plan on using for my
business when I become certified. Can I fill out a schedule
C to deduct the laptop expense from my taxable income even
though I have no gross receipts. From what I can as long as
I am profitable 3 out of 5 years I would be able to deduct
this. I hope to be profitable next tax season (in 2008) so I
think I could do this. Please let me know. Any advice would
be appreciated.
You don't have a Schedule C activity which means you don't
have a business expense to deduct. Costs related to
education that qualifies you for a new trade or business
aren't deductible business expenses anyway.
 
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D

Dick Adams

Aaron Mallin said:
I am currently working as an accountant for a company. I am
studying for the CPA exam. After, I'm certified I hope to do
tax preparation and financial planning on the side for
individuals. I purchased a laptop in 2006 that I exclusively
use to study for the CPA exam and I plan on using for my
business when I become certified. Can I fill out a schedule
C to deduct the laptop expense from my taxable income even
though I have no gross receipts. From what I can as long as
I am profitable 3 out of 5 years I would be able to deduct
this. I hope to be profitable next tax season (in 2008) so I
think I could do this. Please let me know. Any advice would
be appreciated.

Assuming I can deduct the laptop, I believe I have a choice
of deducting it all now or deducting it over 5 years. I
would prefer to deduct it now. Is this correct that I am
able to deduct it 100% right away?
Think of how you would answer this question if it were on
the CPA exam and it meant the difference between pass and
fail.

Answer:
Even if you had a Schedule C, your laptop would not be
deductible because you "exclusively use to study for the
CPA exam" and expenses related to licensure/certification
are generally only deductible for academics "et d'autres
taureau merde artistes". <g>

Do not include the French on the exam.

Dick
 
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K

Kreig Mitchell

Aaron Mallin said:
I am currently working as an accountant for a company. I am
studying for the CPA exam. After, I'm certified I hope to do
tax preparation and financial planning on the side for
individuals. I purchased a laptop in 2006 that I exclusively
use to study for the CPA exam and I plan on using for my
business when I become certified. Can I fill out a schedule
C to deduct the laptop expense from my taxable income even
though I have no gross receipts. From what I can as long as
I am profitable 3 out of 5 years I would be able to deduct
this. I hope to be profitable next tax season (in 2008) so I
think I could do this. Please let me know. Any advice would
be appreciated.

Assuming I can deduct the laptop, I believe I have a choice
of deducting it all now or deducting it over 5 years. I
would prefer to deduct it now. Is this correct that I am
able to deduct it 100% right away?
You should check out the Regs for Section 162 (Specifically,
Treas. Reg. 162-5) and the resulting tax cases. You will
have to determine whether you are in the business of being a
CPA and/or financial planner and when that began. Generally
expenses incurred prior to entering the profession or that
qualify you for a new profession are not deductible as
ordinary business expenses. But, since financial planning
has no specific requirements (i.e., you could have no formal
education and no work experience and be able to hold
yourself out as a financial planner, you might be able to
argue that you were in that business of being a financial
planner prior to to taking the CPA exam and that you
purchased the laptop in furtherance of that profession
(which is a hard argument if you bought it to take the CPA
exam, which would qualify you for another profession)). It
will depend on your facts though....

You will recall the case last year where the MBA student was
able to successfully argue that he was already in the
business; therefore, he was entitled to deduct his MBA
expenses....

As far as a current deduction, well, you will want to review
Section 179 to find that answer. With regard to the 3 of 5
rule that you cite, you will find that that is in section
183 (and it only creates a presumption, which can be
negated).

Best of luck with your new career. I hope you find it as
rewarding as the rest of us do....

Kind regards,

Kreig Mitchell
www.irstaxtrouble.com
www.irstaxtrouble.com/blog.htm
 
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D

Dick Adams

You should check out the Regs for Section 162 (Specifically,
Treas. Reg. 162-5) and the resulting tax cases. You will
have to determine whether you are in the business of being a
CPA and/or financial planner and when that began. Generally
expenses incurred prior to entering the profession or that
qualify you for a new profession are not deductible as
ordinary business expenses. But, since financial planning
has no specific requirements (i.e., you could have no formal
education and no work experience and be able to hold
yourself out as a financial planner, you might be able to
argue that you were in that business of being a financial
planner prior to to taking the CPA exam and that you
purchased the laptop in furtherance of that profession
(which is a hard argument if you bought it to take the CPA
exam, which would qualify you for another profession)). It
will depend on your facts though....

You will recall the case last year where the MBA student was
able to successfully argue that he was already in the
business; therefore, he was entitled to deduct his MBA
expenses....
Many of us expensed all or part of our graduate education
as Continuing Professional Education. When I started grad
school, I had four professional certifications by
examination and wrote off four courses a year plus books
and pro-rated fees as CPE. Because my wife was a Certified
Internal Auditor and had a job as an Auditor, we were able
to write off 21 semester hours of Accounting credits, And
yes, if you are a manager, you can write off part to all of
the cost of an MBA.

But the OP wants to write off a laptop "used exclusively
for CPA exam preparation". That's both a quantum leap and
a no-way-Jose. To prevail upon audit, he'd have to deny
what he has written here and that's somewhere between bad
karma and perjury.

And then we get to his non-existent business for which this
computer is clearly a start-up cost.

Dick
 
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T

taxmax

Wow - where to start.

You are not in business - YET. No deduction possible.
Perhaps a start up expense requering (SP?) capitalization
and amortization beginning when you begin business.

As an aside sir. There are so many very basic issues here
that I would strongly suggest you have a few more years
experience before you open your own practice.

I now remember why I waited until I had 10 years experience
before I opened my own practice and I still was not fully
prepared. I was an audit manager for an international firm
at the time and still recall the nightmares that doing
individual taxes caused me. I am sure that somewhere out
there (and I am sure many will agree) is some sort of
malpractice I committed unknowingly.

Actually, with the complexity of the IRC I still may be
committing malpractice and not know it. <BG> I guess that
is why running/owning a CPA firm is called practicing. We
keep practicing until we fianlly get it right and then we
retire. <BG> After 25+ years I guess I'll keep practicing
for awhile.
Aaron, please pay attention to what Mr.Mark Rigotti is
saying. It is an outstanding advice.
 
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M

Mark X. Rigotti, CPA

Aaron, please pay attention to what Mr.Mark Rigotti is
saying. It is an outstanding advice.
Gosh,

I'm really blushing now.

<BFG>

Mark
 
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D

doshan

I am currently working as an accountant for a company. I am
Many of us expensed all or part of our graduate education
as Continuing Professional Education. When I started grad
school, I had four professional certifications by
examination and wrote off four courses a year plus books
and pro-rated fees as CPE. Because my wife was a Certified
Internal Auditor and had a job as an Auditor, we were able
to write off 21 semester hours of Accounting credits, And
yes, if you are a manager, you can write off part to all of
the cost of an MBA.

But the OP wants to write off a laptop "used exclusively
for CPA exam preparation". That's both a quantum leap and
a no-way-Jose. To prevail upon audit, he'd have to deny
what he has written here and that's somewhere between bad
karma and perjury.

And then we get to his non-existent business for which this
computer is clearly a start-up cost.
With all due respect one can write off most anything they
want. That does not mean one should have. I don't think it
is quite so clear as you make it to be. I would be
especially skeptical of the because you are a manager you
can write off part to all of the cost of an MBA. Most of
these types of situations are maybe, it depends, etc.
Probably would run about 50-50.
 
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