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Investigatory and acquisition costs when starting or buying a new business may be deductible


Many business owners know their business-related expenses may be deductible, but there are different tax rules for business start-up or acquisition costs.  Investigatory costs, start-up costs, organization costs, capitalized costs and expansion costs are treated by the IRS as follows:

In summary, expenses incurred to determine whether to buy a business are investigatory costs and are amortizable under §195, while expenditures incurred to acquire a specific business are acquisition costs under §263.  If you’d like more information about if your business expenses may be deductible, contact a ShindelRock tax professional [2].