"All the investors were seeing were dollar signs in their eyes," one former Fab employee said. "Jason had this hunger to get bigger and do more and take on Amazon, even though our customer base loved Fab because it was curating interesting design products ... He was just like, 'I want more stuff' for the sole reason that he wanted to be more like Amazon."
2018-01-12 Before a business starts to receive revenue, it incurs expenses that the Tax Code classifies as startup or organizational expenses. The startup phase begins when the entrepreneur starts spending money on the business and ends when revenue is 1streceived. There are special rules for deducting these expenses. However, any expenses incurred to actually buy a business or any expenses related to the purchase must be capitalized, meaning that they must be added to the buyer's basis in the business, which is considered a capital asset. Costs that must be capitalized can only be recovered when the business is disposed of or if it is terminated.
In some instances, you may be able to get automatic approval from the IRS to change your method of accounting for amortization. For a list of automatic accounting method changes, see the Instructions for Form 3115. Also, see the Instructions for Form 3115 for more information on getting approval, automatic approval procedures, and a list of exceptions to the automatic approval process.
In a like-kind exchange or involuntary conversion of a section 197 intangible, you must continue to amortize the part of your adjusted basis in the acquired intangible that is not more than your adjusted basis in the exchanged or converted intangible over the remaining amortization period of the exchanged or converted intangible. Amortize over a new 15-year period the part of your adjusted basis in the acquired intangible that is more than your adjusted basis in the exchanged or converted intangible.

Especially if you want to go to retail, the days of cash up front are over. You will need enough capital to handle a 90-120 day float (from paying your supplier to getting paid by customers). Successful crowdfunded projects like Pebble (raised $15M), Ooya ($15M) and Lumoback ($5M) have gone on to raise money from institutional partners in order to continue their dream.
Product life cycle management or PLM is not merely technology but an essential business approach to managing a product from its conception to its decline. The clarity of the PLM process is foremost in ensuring effective management of the product. The process will encompass all aspects of the product including relevant data, the people involved, and the business and technical manufacturing processes. The PLM then becomes the anchor connecting different areas and allows for clear and effective communication among them.
BTCjam, a P2P marketplace launched in 2012 to borrow and lend using bitcoin, announced the company has made “the difficult decision” to close up shop, according to multiple news sources. The platform cited regulatory challenges around bitcoin and said the difficulties introducing bitcoin technology to poor communities around the world were beyond its capacity.
In a like-kind exchange or involuntary conversion of a section 197 intangible, you must continue to amortize the part of your adjusted basis in the acquired intangible that is not more than your adjusted basis in the exchanged or converted intangible over the remaining amortization period of the exchanged or converted intangible. Amortize over a new 15-year period the part of your adjusted basis in the acquired intangible that is more than your adjusted basis in the exchanged or converted intangible.
The 37-year-old entrepreneur is likely to take a final decision about his next venture before the end of the year, the people cited above said. His next venture is keenly awaited, following his forced exit from Flipkart. In May, Walmart agreed to buy 77% in Flipkart for $16 billion. As part of the Flipkart-Walmart deal, Bansal left the company, one of the most controversial developments in the short history of the Indian start-up ecosystem. Bansal was forced out after differences with the company’s then board members over his role after the Walmart acquisition.
Well from my experience, I had to refocus, retool then try again in another venture. So after my first start up failed. I got a Job and didn't work on any new project for a while (around 18 months). After a while, I started to look at different projects I wanted to work on, develop some proof of concept and tried to get mentor ship early out. Once I found a project that I was passionate about again, I worked with organization like Founder Institute to get it right the second time.
What aren’t start up costs? Now that you know what start up expenses are, you need to know what they are not. They do not include monies that you spend on interest, which are deductible anyway, taxes or research and development. They also don’t include any depreciable assets such as furniture, vehicles, machinery and cost of depreciable real estate.  These are treated separately as depreciable assets and can be written off over a number of years or can be written off using bonus depreciation or the expense election.

Natural gas sold under a fixed contract qualifies for a percentage depletion rate of 22%. This is domestic natural gas sold by the producer under a contract that does not provide for a price increase to reflect any increase in the seller's tax liability because of the repeal of percentage depletion for gas. The contract must have been in effect from February 1, 1975, until the date of sale of the gas. Price increases after February 1, 1975, are presumed to take the increase in tax liability into account unless demonstrated otherwise by clear and convincing evidence.


« I am using Eloquens as a part of our content marketing strategy. While for disseminating presentations we use Slideshare, Eloquens is much better suited for business analysis and financial models. We also make a small income from some of our content. It is also a great library of similar products that we also use also to get inspired by other people’s work. I would definitely recommend Eloquens if you are trying to selling professional services and you enjoy content marketing. »
The Tax Adviser is available at a reduced subscription price to members of the Tax Section, which provides tools, technologies, and peer interaction to CPAs with tax practices. More than 23,000 CPAs are Tax Section members. The Section keeps members up to date on tax legislative and regulatory developments. Visit the Tax Center at aicpa.org/tax. The current issue of The Tax Adviser and many other tax resources are available at thetaxadviser.com.
To demonstrate worthlessness, you must only show that you have taken reasonable steps to collect the debt but were unable to do so. It isn’t necessary to go to court if you can show that a judgment from the court would be uncollectible. Bankruptcy of your debtor is generally good evidence of the worthlessness of at least a part of an unsecured and unpreferred debt.
The flip side of working with dreamers, visionaries, and the "Crazy Ones" is that you're working with dreamers, visionaries, and, literally, the "Crazy Ones."  It's an understatement when I say there are a lot  of wacky people who are starting companies (the old joke is that you call yourself an "entrepreneur" when you can't get anyone to hire you and give you a proper job title :). 

If the policy or contract covers a key person, you can deduct the interest on up to $50,000 of debt for that person. However, the deduction for any month cannot be more than the interest figured using Moody's Composite Yield on Seasoned Corporate Bonds (formerly known as Moody's Corporate Bond Yield Average—Monthly Average Corporates) (Moody's rate) for that month.

Assume the same facts as Example 1, except you are a cash method calendar year taxpayer. You may deduct the entire $12,000 payment for 2017. The payment applies to your right to use the property that does not extend beyond 12 months after the date you received this right. If you deduct the $12,000 in 2017, you should not deduct any part of this payment in 2018.

« Eloquens is the place to go to get tested financial models to be used in your business. Why reinvent the wheel again and again? So much time is wasted when we have to go back to the drawing board time after time. The benefits of being a user of Eloquens are the broad tool library and the networking opportunities with authors who are at the top of their game. For those that have developed tools you can sell/share them as an author to a wide community of users. I highly recommend Eloquens for anyone in the financial industry! »

“I didn’t even really know the other board members. Everything I had done with this company had been motivated by greed. I didn’t like any of them. Now I know: only do business with people you respect and like. A lot. I was scared. But I knew this: I had been through worse things in business (well…almost) and I had always bounced back. So I followed my own advice: was I physically taking care of myself? Check. Was I trying to surround myself with people who I loved and who loved me? Check—not on the board, but on the show, and my family and friends. Was I creative every day? Check. Was I taking care of my spiritually? Check. All this means is: I was alive. Might as well enjoy it. Might as well love it. Might as well immerse myself in it. The horror of losing $9 million might change my bank account. But what a story!”
Expenses of investigating the creation or acquisition of a trade or business are known as investigatory expenses. They are the costs incurred in searching for and analyzing prospective businesses prior to making a final decision whether to acquire an existing business, create a new business, or forgo a business transaction altogether (Rev. Rul. 99-23). These costs may relate to a category of businesses or to a particular business. They may be treated as deductible/amortizable startup costs only if they would be currently deductible by an existing trade or business in the same field. Deductible investigatory expenses include costs incurred for the analysis or survey of potential markets, products, labor supply, and transportation facilities.

Internal Revenue Code Section 162 allows current deductions for “ordinary and necessary” business expenses. Section 162 expenses are basically routine expenses incurred in operating an up-and-running business. Examples include employee wages, rent, utilities and advertising. Section 162 expenses can generally be deducted in the year when they’re paid or incurred. 


Fab was originally known as Fabulis a gay social networking site before pivoting wonderfully into a daily flash sales site for independent artists. Cofounders Jason Goldberg and Bradford Shellhammer admitted to themselves that Fabulis wasn’t turning out to be the success that they hoped, being stuck at 150,000 users for the last few months. It was time to pivot.

The SBA’s flagship 7(a) loan program also offers financing that borrowers can use to start businesses. But 7(a) SBA loans are tough to get. They typically go to established businesses that can provide collateral — a physical asset, such as real estate or equipment, that the lender can sell if you default. The qualifications are strict, and even if you qualify, the process can take several months.

Also, funds that you spend to qualify to get into the business or profession does not qualify as start up costs. Thus, costs incurred to get a real estate license, which has an unlimited duration as long as you pay fees and get continuing education, aren’t qualified start up costs.  The same can be said for CPA exam preparation and licenses, bar review courses and licenses and getting an undergraduate bachelors degree. However, other than getting yourself qualified for the new profession or trade or business, any monies spent on investigating these business would be a qualified start-up expenses.


You paid $10,000 to get a lease with 20 years remaining on it and two options to renew for 5 years each. Of this cost, you paid $7,000 for the original lease and $3,000 for the renewal options. Because $7,000 is less than 75% of the total $10,000 cost of the lease (or $7,500), you must amortize the $10,000 over 30 years. That is the remaining life of your present lease plus the periods for renewal.

“Every single person other than two of my former partners left PYP Media in July 2011 to start The Muse, and in our first month, we had more people visit the site than in the history of PYP. We built a much stronger product, raced ahead with a clear sense of purpose and were accepted into Y Combinator several months later. We’ve raised well over $2 million in venture and angel funding to date and reached over 15 million people. In many ways, that first failure was the best thing that ever happened to me.”


In the fall, Goldberg began exploring acquisition offers for Fab's assets so he could focus fully on Hem. A source said Zulily and Groupon were both contenders. In December 2014, Fab formally changed the legal entity of the company to Hem and later this month, PCH Innovations is expected to buy what's left of Fab in a $15-$50 million stock-based deal.
We talked to a number of VCs, but eventually we ended up financing our startup entirely with angel money. The main reason was that we feared a brand-name VC firm would stick us with a newscaster as part of the deal. That might have been ok if he was content to limit himself to talking to the press, but what if he wanted to have a say in running the company? That would have led to disaster, because our software was so complex. We were a company whose whole m.o. was to win through better technology. The strategic decisions were mostly decisions about technology, and we didn't need any help with those.
For a variety of reasons, more on the side of the money guys and not because of us, the transaction didn’t go through … We had several groups looking to acquire us, and for a variety of reasons those didn’t pan out … We were building an enterprise software platform. It was a very expensive proposition, with high potential rewards … There was a high demand and high interest in what we were doing. That is what was so disappointing. I think you will see several companies license our technology … This has nothing to do with the competition. It has to do with the funding issue. I think there is huge demand for new approaches with game engine technology.
Eventually Yeloha shut down because we could not raise the financing we needed in order to massively grow our network. Timing hurt. The so called “Venture Capital winter” of 2016 coincided with the turmoil in the solar stock market and the bankruptcy of multi-billion dollar SunEdison, venture investors fled from solar, and strategic investors crystalized their strategy around profitability.
Joost attracted investment – $45 million to be exact – because it appeared to be the antithesis of YouTube, suspected by the networks of enabling and then turning a blind eye to piracy. Indeed, news coverage at the time billed Joost as a “YouTube killer.” But while YouTube proved popular, was acquired by Google and came to dominate web video, adoption of Joost was stunted by its peer-to-peer technology, which allowed high-quality video but required a clunky software download.
Businesses like to purchase expensive items that are used for long periods of time that are classified as investments. Commonly amortized items for the purpose of spreading costs include machinery, buildings, and equipment. From an accounting perspective, a sudden purchase of expensive factory during a quarterly period can skew the financials, so its value is amortized over the expected life of the factory instead. Although it can technically be considered amortizing, this is usually referred to as the depreciation expense of an asset amortized over its expected lifetime. Use our Depreciation Calculator to depreciate items according to conventional accounting standards.

We had a user acquisition problem, and the best route involved a competitor…The best acquisition method I saw was tapping into an existing network of people who had filed 1099s: like Intuit’s hundreds of millions of tax returns, many with 1099 income. Unfortunately, Intuit released an identical competing product to us. It’s not ideal when your best user acquisition strategy is partnering with a company who has a competing product.

If revenue has declined for three consecutive quarters, you probably entered the declining phase two or so years ago. Take action and start looking for ways to innovate. If owners are focused on what they can take out of the business before they retire and aren’t willing to invest in new technology, people or marketing, it’s a sign that they're in decline.
Steering the ship — handling all of the engineering, manufacturing, marketing, and retailing, even when you’re taking 90 percent of the subsequent profits — was ultimately too expensive of a proposition, especially in comparison to other, less-handholding-oriented start-ups. “The reason why Kickstarter makes a ton of money is they don’t have to do anything besides put up a website,” [founder Ben] Kaufman notes.

Then there are the necessary permits and legal requirements. You’ll need to apply for a federal brewing permit with the Alcohol and Tobacco Tax and Trade Bureau. Although the application doesn’t cost anything, it’s usually takes four months to process, according to Matthew Cordell and Derek Allen, who have advised several startup breweries in North Carolina for legal firm Ward and Smith, P.A.
Video producers are afraid of charging for content, because they don’t think people will pay. And they’re largely right. Consumers still don’t like paying for stuff, period. We did find some specific industry verticals where the model works (some high schools, some boxing and mixed martial arts events, some exclusive conferences), but not enough to warrant a large market and an independent company.
India's startup culture, Raghunandan believes, doesn't take voting rights seriously. “With today's trend of four-five co-founders, no single founder has more than a 10% stake in the company. If voting rights were important, I can't think of how many people would have got replaced. It was a huge deal when Kalyan (Krishnamurthy) replaced Binny as CEO but we don't have too many examples of that kind,” he explains.
If you are an independent producer or royalty owner, you figure percentage depletion using a rate of 15% of the gross income from the property based on your average daily production of domestic crude oil or domestic natural gas up to your depletable oil or natural gas quantity. However, certain refiners, as explained next, and certain retailers and transferees of proven oil and gas properties, as explained next, cannot claim percentage depletion. For information on figuring the deduction, see Figuring percentage depletion , later.
Life cycle models are not just a phenomenon of the life sciences. Industries experience a similar cycle of life. Just as a person is born, grows, matures, and eventually experiences decline and ultimately death, so too do industries and product lines. The stages are the same for all industries, yet every industry will experience these stages differently, they will last longer for some and pass quickly for others. Even within the same industry, various firms may be at different life cycle stages. A firms strategic plan is likely to be greatly influenced by the stage in the life cycle at which the firm finds itself. Some companies or even industries find new uses for declining products, thus extending their life cycle.

In hindsight, a little more downtime would’ve been welcome–we started building it quickly after the software product failed. But I credit this little process to the fact that we’re now building Wakefield, which publishes a daily email on startups and also puts on UNCUBED, New York’s largest startup tech recruiting fair. Content and events–our strengths. And it’s going well so far.


A loan's stated redemption price at maturity is the sum of all amounts (principal and interest) payable on it other than qualified stated interest. Qualified stated interest is stated interest that is unconditionally payable in cash or property (other than another loan of the issuer) at least annually over the term of the loan at a single fixed rate.


The maturity phase begins with a shakeout period, during which growth slows, focus shifts toward expense reduction and consolidation occurs. Firms achieve economies of scale, hampering the sustainability of smaller competitors. As maturity is achieved, barriers to entry become higher, and the competitive landscape becomes more clear. Market share and cash flow become the primary goals of the remaining companies now that growth is relatively less important. Price competition becomes much more relevant as product differentiation declines.

Celina, a calendar year taxpayer, borrows $100,000 on January 4 and immediately uses the proceeds to open a checking account. No other amounts are deposited in the account during the year and no part of the loan principal is repaid during the year. On April 2, Celina uses $20,000 from the checking account for a passive activity expenditure. On September 4, Celina uses an additional $40,000 from the account for personal purposes.
Businesses in this stage often see rapid growth in both revenue and cash flow as the blueprint has now been established, but be warned about getting too comfortable. In business, if you are not moving forward you are moving backwards, and without a constant, almost nervous itch or desire to expand, complacency can set in, and you might get caught off guard.
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