Posted by JHyre in Ohio on November 18, 2001 at 06:39:48:
“but in the mean time, can expenses I incur now as a self-employed property flipper be deducted (such as car, cell phone, computer, rented space in basement of mom’s house)?”
All of the above is deductible to you. If your mom is renting the space to you at market prices, she can deduct related expenditures as well.
“Do I have to have a business license to deduct or can I just claim self-employed?”
To deduct, no business license is needed, though if the locals require one, I’d get it. They’re usually pretty cheap.
“Is there a limit to amounts/percentages?”
You prorate the deduction based on personal/business use. For example, if you use an item 60% for business, you can write-off or depreciate 60% of it…some items (“listed items” such as computers and cameras") must be used at least 50% for business to get any write-off at all.
“Can I deduct these expenses I have now AFTER I form a corporation in 2 months time?”
You prorate between you and the corporation, depending on the portion of expenses borne. For example, if you and the corp each own a computer for half a year, you each get 1/2 the depreciation for that year.