Seeking Tax Tip: How to expense seminars, bootcamps, guru materials

[Dawn Wilkins]

Question: Is it best to classify these expenses as education or consultation in order to avoid later IRS scrutiny?On the advice of this site I joined my local REIA. Unfortunately I didn't heed all the warnings. Went to the local conference which I didn't realize was just a sales fest in disguise. I signed up for a bootcamp. At the bootcamp I bought some materials. Was it worth price probably not but lesson learned. Now I'm trying to make lemonade out of lemons. I started LLC, purchased a buy and hold rental, sold an existing rental. Now it's time for taxes. Trying to find an experienced accountant that can provide some bookkeeping advice..running out of time for this year but I want to be able to set up things right in quickbooks before I do hand over to accountant.

[Dave Toelkes]

You deduct your expenses for qualifying work-related education directly from your self-employment income on Schedule C.  To be work-related education, the training (bootcamp) must maintain or improve skills used in your present business.  If the bootcamp was designed to make you a better rehabber or to improve your skills in some aspect of your rehabbing business, then the cost is deductible. 

From your comments, it appears that the bootcamp training was geared to landlording, and not directly related to a rehabbing business.  Landlording, in my opinion, is a new trade or business that requires different skills than needed in a rehabbing business.  Thus, in my opinion, the cost of the training is a personal expense and not deductible.  

Additionally, a residential rental property activity is a passive income activity reported on Schedule E, not an active income business reported on Schedule C.  Whether you can claim a business startup cost for a passive income activity is outside my scope.  This is a question to be addressed to your CPA.  

I would consider the real estate investment club as a trade organization and deduct the membership dues as a business expense.