Rich dad course tax write off

You can classify this sort of thing as "start up costs", but those I believe are not deducted all at once if I recall correctly. I was wrong on a tax matter earlier in the evening, so I could be wrong again ...

And I'm not a CPA / accountant / tax preparer of any sort ...

Charles Perkins

Landlord · Seattle, Washington

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Icon_minipost Mar 22 '11, 04:24 PM

For a business to deduct education costs the expense must meet the following 2 tests.

1) Serve a bona fide business purpose
2) The education will maintain or improve skills needed in the business

I think you could make a case that the course will maintain or improve skills. Part of being a bona fide business expense though is being ordinary and necessary. The course might meet this test as well.

A $500 course would be easy to justify a $10,000 course might be justifiable.

An investor might not necessarily have a business, but is allowed to deduct expenses related to investing.

Ebere Okoye

Accountant · Hyattsville, Maryland

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Icon_minipost Mar 23 '11, 08:07 AM

Originally posted by ladymarshall

I paid for some rich dad course, Can I get a write off on them? how do I get a write off for education

I agree with Charles on the expense needing to be ordinary and necessary which for a real estate investor

For my clients, I would usually treat those costs as start up costs subject to the $5k first year deduction and then the balance over 15 years.

There are other instances where I accelerate the amortization if the client has shown significant real estate activity.

And for my clients who do rehabs within their first year, I include in the cost basis of the property.

CAVEAT: I usually shy away from taking this deduction for clients that do not have a registered and viable business because then the question becomes, if you do not have a real estate business, was this "NECESSARY"

Ebere Okoye,
Telephone: 18885023767
Website: http://www.wealthbuildingcpa.com
Ebere Okoye, WealthBuildingCPA

Will Barnard

Rehabber · Santa Clarita, California

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Icon_minipost Mar 23 '11, 08:30 AM

Great answers, particularly the last one and from Charles.
To sum it up, if it meets any of the two criteria and your individual situation would warrant it from a tax standpoint, explained nicely by WBCPA

Will Barnard, Barnard Enterprises, Inc.
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info@barnardenterprises.com

Matt R.

Real Estate Investor · Sunnyvale, California

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Icon_minipost Mar 23 '11, 11:25 AM

If I might add to Ebere's comments...
Anything that you pay for BEFORE you start in business (eg books or classes) would be a start up cost. Once your business is started then it's an opperating cost - as long as it's necessary and reasonable.

Caveat : If you don't actually start the business - no right offs on anything.

Example :
In 2009 I spent $10k on Rich Dad's course to learn all about real estate (Ha ! Look, this is just for sake of the example) But I did not do anything, so I'm not in business so no deductions for the course.
In 2010 I bought a house and flippped it for a profit of $5k
OK, now I'm in business and had a profit of $5k
But I also had start up costs of $10k, whiich I can amortize over the next 150 months (I think, I might be wrong on exact number of months)

Jonathan Tew

Real Estate Investor · Lawrenceville, Georgia

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Icon_minipost Mar 23 '11, 02:03 PM

I went to a Rich Dad seminar and I was told that it could be written off as well. From what I understand its better if you have a corporation established which can be used as a start-up expense. Also check with a CPA.

Tod Radford

Real Estate Investor · Southlake, Texas

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Icon_minipost Mar 23 '11, 02:19 PM

I think you could only deduct 50% as Entertainment Expense only :)

Tod Radford, Thompson Realty Corporation
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radyakllc@gmail.com http://www.thompson-realty.com

Ebere Okoye

Accountant · Hyattsville, Maryland

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Icon_minipost Mar 24 '11, 03:49 AM

Originally posted by Tod Radford

I think you could only deduct 50% as Entertainment Expense only :)

Hi Tod, I would not consider education expense as an entertainment unless of course, SOMEONE chooses to be entertained during the teaching, lol

Ebere Okoye,
Telephone: 18885023767
Website: http://www.wealthbuildingcpa.com
Ebere Okoye, WealthBuildingCPA

Ebere Okoye

Accountant · Hyattsville, Maryland

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Icon_minipost Mar 24 '11, 03:51 AM

[quote=
Example :
In 2009 I spent $10k on Rich Dad's course to learn all about real estate (Ha ! Look, this is just for sake of the example) But I did not do anything, so I'm not in business so no deductions for the course.

Sounds too real to be an example LOL!

Ebere Okoye,
Telephone: 18885023767
Website: http://www.wealthbuildingcpa.com
Ebere Okoye, WealthBuildingCPA

Derrick Williams

Real Estate Investor · Normal, Illinois

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Icon_minipost Mar 24 '11, 07:02 AM

Im not sure about the write off, but rich dad in general. I like the books but have been told to stay away from there training courses.