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In 2012, we agreed to open a franchise business and paid the $25,000 franchise fee. I am in the military and needed to re-enlist for insurance coverage for my youngest daughter after her stroke during birth. We would like to report the $25,000 as a business loss and reduce our personal taxes. Is this an eligible deduction?


Expert Niky Kartari's Answer:

 Usually an initial franchise fee is non-refundable. from the Company one buys the franchise from.    It appears that you never opened the franchise after paying the franchise fee in 2012.  .  You can deduct start up costs to acquire a specific business and prior to its actual operation only in the year in which your attempt to go into business fails.  Since you paid the fee in 2012, it is unfortunately  too late to deduct the $25,000  franchise fee on your 2014 tax return. and  this  amount becomes a personal expense/loss.and is non-deductible.

Niky Kartari, CPA


13 yrs experience

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