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February 1, 2021
Question

Can I deduct the General Liability Insurance I pre-paid for when starting my business as a startup cost?

  • February 1, 2021
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February 1, 2021

internal revenue code section 195 definition of start-up costs.

any amount paid or incurred in connection with—
(i)investigating the creation or acquisition of an active trade or business, or
(ii)creating an active trade or business, or
(iii)any activity engaged in for profit and for the production of income before the day on which the active trade or business begins, in anticipation of such activity becoming an active trade or business

if your business started in 2020;

up to the first $5,000 of start-up costs are deductible unless the amount is 

between $5,000 and $50,000, the excess over $5,000 must be amortized over 180 months starting with the month the business began but

if it is over $50,000 the $5,000 is reduced $ for $ for the excess (so at $55,000 nothing is deductible) the amount not deductible is amortized over the same period as above.