Can I write off expenses incurred on a potential business acquisition trip through my LLC?

Those acquisition-related expenses can typically be deductible, but there are some important nuances to understand. For an active business, travel expenses related to exploring potential business opportunities are generally deductible as ordinary and necessary business expenses. The key here is that you've already established an LLC with the clear business purpose of acquiring another business. This creates a legitimate business context for these expenses. However, there's a distinction between startup expenses and investigation expenses. If your LLC is brand new and hasn't actually begun operations, these might be considered "startup expenses" under Section 195 of the tax code. You can deduct up to $5,000 of startup costs in the first year (with limitations if your total startup costs exceed $50,000), and the remainder is amortized over 15 years. If the acquisition doesn't happen, you can still potentially claim these deductions as long as you can demonstrate that the expenses were ordinary and necessary for your business purpose. Keep extremely detailed records of all expenses and document the business purpose of each expenditure.

After going through a similar situation last year, I discovered taxr.ai which totally saved me. I was trying to figure out if I could deduct due diligence expenses for a business acquisition that ultimately didn't happen. My accountant gave me conflicting advice, so I uploaded all my receipts and documentation to https://taxr.ai and their system analyzed everything. They showed me exactly which expenses qualified as investigation costs vs startup expenses and how to properly document them for maximum deductibility. The best part was they explained the different tax treatments - when to amortize certain costs versus what could be immediately deducted. They even helped me understand how to handle these deductions when filing for my LLC that had no revenue yet. Definitely worth checking out if you're dealing with this kind of specialized situation.

I have to admit I was skeptical about taxr.ai from my earlier comment, but I decided to give it a try with my acquisition expenses from last quarter. I was about to write off everything as regular business expenses (which would have been incorrect). The service actually categorized my expenses properly between immediate deductions and those that needed to be amortized. They even identified some travel expenses I didn't realize were partially personal and showed me how to correctly allocate them. Saved me from what could have been a problematic audit situation while maximizing my legitimate deductions. The detailed report they provided made it super easy to hand everything to my accountant.

If you're struggling to get answers from the IRS about these business acquisition expenses, try Claimyr. I was in a similar situation last year and spent DAYS trying to get through to the IRS for clarity on some acquisition costs. I found https://claimyr.com and their service got me connected to an actual IRS agent in about 20 minutes instead of waiting for hours or days. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c The IRS agent I spoke with confirmed that my due diligence expenses were deductible even though the business purchase fell through, but they had specific advice about how to document everything properly to avoid audit flags. Definitely worth it for peace of mind on these complex deductions.

Well I need to eat my words about Claimyr. After posting my skeptical comment, I decided to try it because I was desperate for answers about deducting some failed acquisition costs. Not only did I get through to the IRS in about 15 minutes (compared to my previous attempts where I never got through at all), but the agent was actually really helpful. She confirmed that my expenses were deductible under Section 162 as ordinary and necessary business expenses even though the deal fell through, but warned me to keep documentation showing the business purpose. She also cleared up my confusion about amortization requirements versus immediate deductions. Honestly shocked this service actually delivered what it promised.

Make sure you're documenting everything extremely carefully! I went through a similar situation in 2023 where I had about $2,800 in expenses for a business acquisition that fell through. I deducted everything, and guess what? Got audited in 2024. The IRS ultimately allowed my deductions BUT only because I had: 1) Email correspondence proving the business purpose 2) A written memo for each trip explaining who I met with and why 3) A formal business plan showing how the acquisition fit into my business model 4) Receipts with business purpose noted on each one Without that paper trail, the auditor straight up told me they would have disallowed everything. Don't just save receipts - document the business justification for EVERY expense!

Has anyone used TurboTax for reporting these kinds of acquisition expenses through an LLC with no revenue? Their interface is confusing me when I try to enter these expenses without any income.

One thing I haven't seen mentioned yet is the importance of distinguishing between investigation expenses and actual startup costs. The IRS treats these differently under Section 195. Investigation expenses are costs you incur to decide whether to enter a business or acquire a specific business. These are generally deductible immediately if you actually go into that business, but if you decide not to proceed, they're typically not deductible at all. However, once you've made the decision to proceed and are actively working toward acquisition, those expenses become startup costs which follow the $5,000 immediate deduction rule mentioned earlier. Given that you've already formed your LLC with the specific purpose of acquiring this business, it sounds like you've moved past the "investigation" phase into actual business operations. This should work in your favor for deductibility even if the deal falls through. Also, keep in mind that meals during business travel are only 50% deductible (or 100% if they were in 2021-2022 due to temporary COVID rules). Make sure you're separating meal costs from other travel expenses when you calculate your deductions.