Ways to write off prospecting trips

[Charles H.]

Hello,

I am looking for strategies to write off trips to some areas I'd like to invest in.

I know that when you own a place you rent out, as an individual, you can write off the trip when you go check it out.

Is there anything that can be done when you are in a prospecting time ? Should I create some kind of investment LLC and put the airfare as expense?

Appreciate your ideas and strategies.

Thanks.

Charles

[Eamonn McElroy]

@Charles H.

If your activities rise to the level of a 'trade or business', a general non-specific search in a new geographic area would be start up expenses under IRC Sec 195.

Once you've identified a specific property, expenses are capitalized and added to the property's basis if acquired.

Expensing the costs, even through an active LLC/ "investment LLC" is not correct treatment and will get adjusted should the IRS ever audit you.

Encourage you to work with your tax CPA/EA as it's very possible not all of the travel expenses are 100% business related.