Starting Your Business/Keeping Tax Records
What are Business Expenses
Franchise Payments
Franchise,
trademark, trade name. A franchise includes an agreement
that gives one of the parties to the agreement the right to distribute,
sell, or provide goods, services, or facilities within a specified
area.
If you buy a franchise, trademark, or trade name you can deduct the
amount you pay or incur for the transfer as a business expense only if the payments are
part of a series of payments that are:
1. Contingent on productivity, use, or disposition of the item,
2. Payable at least annually for the entire term of the transfer
agreement, and
3. Substantially equal in amount (or payable under a fixed formula).
Important references
Publication
535
Business Expenses
Form
1040 Schedule C Profit or Loss from Business
Expenses