Can money paid to a new business for future products be start up funds and spread over 5 years?

Question

My employer would like to help me start a palm tree farm. I would like to know if I take the money will I have to pay taxes on it this April? Will I be allowed to spread it over 5 years by calling it start up cost? It is our idea to pay it back in the form of palms delivered in 5 to 7 years. The amount is sizeable and would be spent on land,equipment, and soil preperation. Is there a CPA in the house? Thanks for any help and advise, Digger

Answer 1

If the business will be paying it back (either with products or with money), it can be considered a loan/investment.  Loans/investments are not income.    Investors typically want some type of control in the business, which means you will need to decide how to structure the business, i.e. partnership, corporation, etc.  Just make sure terms are clearly stated in a contract. If it is a loan, again not income, not startup costs.  Startup costs are the expenses associated with getting the business open. good luck