So, tax season is upon us and I'm finding myself doing taxes (yay)
My question is simple (I think):
In 2010, I started my company, bootstrapped. I've initially paid a bunch of expenses from personal account, such as: company registration and other startup expenses
As soon as I got my bank account, I've put a chunk of personal money into it as the official "seed" amount. I immediately turned around and expensed and paid myself back every expense I incurred. In this way, I was trying to make sure that every personal payment that went for startup expenses was on the books thru expense reports. The only personal payment into company ended up being the "seed" check. Now, by the end of 2010, I did not spend all the seed money and since I was still building my product, I didn't generate anything at all.
Now is the question: I understand I can write off up to $10k in startup costs, but I believe that they must be "itemized" and there are no mentions of anything about a "seed" chunk the way I've done it as a qualifying itemization.
1) Do I claim the seed chunk as income from schedule C perspective and write-off corporate expenses as usual? If so, how do I write-off the "seed" chunk itself? Does this mean I have to pay taxes on the amount of seed money that was not spent in 2010?
2) Do I "undo" initial expense reports and original seed investment and simply deduct ALL my original spending as "startup costs" for 2010? How do I "undo" this?
Appreciate the advice. My startup is an LLC partnership.