I read in Lassiter's Tax Guide that travel expenses could be deducted from 2016 Form 1040 or Form 1040A if they were for business purposes.

I spent money on airplane flights from North Carolina to Boston Logan to gather material for a book or I.E.E.E article about a new U.S. patent to deconvolve signals through polynomial division with a 48-way multicore parallel processor. Can I deduct these expenses?

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    Did you publish the book or get paid for the IEEE article? With no income, you have no way to write off the expense. – JTP - Apologise to Monica Mar 4 '17 at 21:47
  • @Joe Taxpayer, Thank you for your comment. I was not cognizant that I.E.E.E pays people to write articles. I had income in 2016 from C# software engineering. – Frank Mar 4 '17 at 22:09
  • @Joe Taxpayer, Could I submit a 10 page book to a publisher by March 15th 2017 based on Stack Exchange articles I wrote in the past year and a half? Thank you. – Frank Mar 4 '17 at 22:26
  • Me neither. My comment was to try to understand the timing. You can write off expenses, but only against income from that endeavor. – JTP - Apologise to Monica Mar 4 '17 at 22:26
  • @JoeTaxpayer, Your answers could benefit thousands of taxpayers who innovate on their own account thereby strengthening our country's competitive positioning. I read that a published book must have an annotated list of references. I thought that Lassister implied that my published book should have a positive intangible asset value of say $100. Supposing I ran up $7000 in travel expenses counterbalanced by a software developer salary of $75000 and $100 of published book revenue, what could do about that on 2016 tax return? Thank you. – Frank Mar 4 '17 at 23:21

Hobby expenses are not tax deductible. Business expenses are, but only if it's a bona fide business.

First they look at profitability: if you reported a net profit (i.e. paid taxes) in your first 3 years, they will believe you rant on Youtube for a living. Remember, by the time they get around to auditing you, you'll likely be well into, or through, your third year.

There is an exception for farms. Other than that, if you lose money year after year, you better be able to show that you look, walk and quack like a business; and one with a reasonable business reason for delayed profitability. For instance Netflix's old business model of mailing DVDs had very high fixed infrastructure expense that took years to turn profitable, but was a very sensible model. They're fine with that. Pets.com swandived into oblivion but they earnestly tried. They're fine with that too.

You can't mix all your activities. If you're an electrician specializing in IoT and smart homes, can you deduct a trip to the CES trade show, you bet. Blackhat conference, arguable. SES? No way. Now if you had a second business of a product-reco site which profited by ads and affiliate links, then SES would be fine to deduct from that business. But if this second business loses money every year, it's a hobby and not deductible at all.

That person would want separate accounting books for the electrician and webmaster businesses. That's a basic "duck test" of a business vs. a hobby. You need to be able to show how each business gets income and pays expense separate from every other business and your personal life. It's a best-practice to give each business a separate checking account and checkbook.

You don't need to risk tax penalties on a business-larva that may never pupate. You can amend your taxes up to 3 years after the proper filing date. I save my expense reciepts for each tax year, and if a business becomes justifiable, I go back and amend past years' tax forms, taking those deductions. IRS gives me a refund check, with interest!

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  • You are saying that, if in year 3, you finally have a profit, you can go back and take the old losses? You have a citation for this? – JTP - Apologise to Monica Mar 5 '17 at 0:54
  • @JoeTaxpayer irs.gov/help-resources/tools-faqs/faqs-for-individuals/… If you didn't claim the correct filing status or you need to change your income, deductions, or credits, you should file an amended or corrected return using Form 1040X, Amended U.S. Individual Income Tax Return. I've done it every year since '04; there's always something. – Harper - Reinstate Monica Mar 5 '17 at 1:07
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    You can amend for any reason; the point here is that if the business proves its mettle in year 3, it was always a business as of year 1, and those deductions were merely overlooked; a perfectly legitimate reason to amend. There is nothing nefarious about this; failing to take the deductions on initial filing does not foreclose doing so later. This "amend when you can prove a deduction" is a general rule, so I can't show you a specific cite re: a nascent business. – Harper - Reinstate Monica Mar 5 '17 at 1:24
  • Always happy to learn, and fill in my own knowledge gaps. Much appreciated. – JTP - Apologise to Monica Mar 5 '17 at 1:32
  • @JoeTaxpayer : I read in a 2017 reliable book from Lasser that if your patent expires worthless then you can deduct the $5750 an inventor paid Davison.com in Pittsburgh PA – Frank Mar 5 '17 at 14:04

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