I had an identical situation in Commack about 6 years ago. After about $90,000 was invested issues developed with the NYS DEC and the landlord. I reasoned that the intention was to open so I took everything as a 1231 loss in one year. Rob Barnett contends I was wrong because nothing was ever placed into service. But it was comparable to a casualty. I added an 8275. We never heard from the IRS nor NYS.
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M Daniel Martin
M. DANIEL MARTIN, CPA EA
Babylon NY
M Daniel
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Original Message:
Sent: 06-19-2019 11:23
From: Lori Di Marco
Subject: Expenses for business that never opened
I have a partnership that was going to open a restaurant. All of the costs incurred to -date, design and construction and consulting have been capitalized to amortize when the business opens. Now the business is never opening, so how do we write off the capitalized expenses? Do I report as full amortization in this year when partners agree to stop moving forward and show on 1065 as expense or is it capital loss that each partner will report individually based on their basis/capital contributions?
Thank you.
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Lori Di Marco
LORI DI MARCO, CPA, PLLC
Sayville NY
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