K-1 and deductible software development costs

Discussion in 'Professional Trading' started by ManhattanTrader, Aug 3, 2003.

  1. Hello,

    does anyone know whether costs incurred for proprietary software development can be deducted from K-1 income? the programmer I will use has a legit software development/consulting company and everything.

  2. Foz


    Are you a schedule C Trader? Is it a business expense? Then sure.
  3. Hi,

    I'm not sure what you mean by Schedule C. I'm a proprietary trader(LLC member) and they'll issue me a K-1 next year. yes, it's definetely a business expense

  4. mgkrebs


    You could have your firm pay the guy out of your sub account and list the expense on the k1.
  5. that makes sense. thanks for the tip
  6. Foz


    If you don't file a Sch. C, are you thinking of deducting it on your Sch. A? It will only be deductible to the extent it exceeds 2% of your AGI.
  7. Foz



  8. thanks for the info. would there be a a maximum amount of software development expenses that can be deducted in a certain year? some percentage of taxable income?

    thanks in advance
  9. egusc


    There is no maximum rule. However, the general rule for expenses is that it must be an ordinary and nessacary business expense. So the dollar amount of the expense must bear some relationship to the possible income that a typical business would expect.
  10. egusc,

    thanks for the info
    #10     Dec 8, 2003