Contractors often spend real money trying to buy:• Another construction company• A specialty trade shop• A competitor with crews & equipment

• When the deal dies, the big question is:
• Can you deduct the costs?

Short answer: some yes, some no.

🟪✔️ Early investigation costsIndustry research, preliminary consultants, feasibility work➡️ Not deductible if the deal never closes(Unless rolled into a later, similar acquisition)

🟪✔️ Acquisition-specific costsLegal, accounting, due diligence, deal structuring➡️ If the deal fails, these become a capital loss• Offsets capital gains• Up to $3k/year against ordinary income• Remainder carries forward

🚫 Common mistake:Lumping all deal costs together and assuming they’re deductible.

If you’re a contractor growing through acquisitions, tax planning needs to happen before the deal — not after it collapses.

Disclaimer: This content is provided for educational purposes only and is not legal, tax, accounting, or financial advice. Every situation is unique, so consult your own attorney, CPA, or financial advisor before making decisions based on this information.