QUESTION DETAIL
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I formed an LLC several years ago with the intention of providing early-stage preclinical research services to small biotechnology companies. Getting this endeavor going beyond the dream stage was not possible for me given a general contractor's estimate of the cost of retrofitting space and difficulties I would face in getting permits. Thus, while I have maintained this LLC, it has never done any business. I am now teaching in a new medical school where I hope to engage in medical research on a very limited budget. Toward this end, I have purchased a significant amount of used medical research equipment at salvage prices through ebay (~$5,000). I am still waiting for the school to provide the space resources I need to use this equipment to advance my scientific career. If/when that happens, my primary focus would be personal research and training medical students how to do research, but there is a remote possibility that I would use my LLC to lease some of that space from the school to do contract research for others. Should I try to deduct any of my used equipment purchases? If yes, via LLC, personal/professional/teaching, etc.?
ANSWER
The BIDaWIZ Team's Answer:
Is the primary purpose of personal research and training medical students a hobby or an actual business? Do you intend to be compensated for providing those resources? If not, then it will be difficult to claim those expenses, which would be depreciated over time by the way. This is referenced in IRS Publication 535 and IRC Section 162. If you will be compensated, then this certainly can be treated as a business expense and recognized as depreciation over time.
The only other possibility is that these expenses may (although this may be a stretch), qualify as an education expense to you in the advancement of your career. This doesn't appear to be the case though, but we may as well mention it.
References: IRS Publication 535; IRC Section 162
State: South Carolina
