Russ,

Depending on how much you have spent, you may be able to deduct some or all of your "start up" expenses in 2005 IF you have actually opened for business. If you have not actually started operations by the end of 2005, you won't be able to deduct these expenses in 2005.

Expenses leading up to your actually "opening your doors" must be capitalized, but can be deducted after you actually open for business if you make the required tax election.

Gary

Zip Code: garyd@davisandbrandel.com

I'm in a similar situation. What exactly defines "open for business"? If my doors are open, but I haven't brought in my first paying client, can I still say that I am open for business? Do I need some kind of documentation, such as a "grand opening" newspaper advertisement or insurance coverage with a 2005 effective date? Thank you for the clarification!

Zip Code: debbiekaysmith@erols.com

You just have to have your doors open and be available to provide services. The first sentence of your email is correct. Certainly a grand opening could clearly define the date, but it's not necessary and grand openings often actually occur after the doors are open for business.

If you were renting an apartment, all you would have to do is have the For Rent sign out front. For a medical practice, you just have to hang the OPEN sign and actually be available to see patients.

Any documentation is helpful. You can always take a picture!

Gary

Zip Code: garyd@davisandbrandel.com