I was right. I knew it was that straight forward.
They still aren't business expenses. They are capital losses, which mean a 3k limit.
from the link [i]What if you don't start the business? If you ultimately decide not to go into business, what happens to your costs? The portion of costs you paid to generally investigate the possibilities of going into business at all, or to purchase a non-specific existing business, are considered personal costs and are not deductible.
However, the total costs that you paid in your attempt to start or purchase a specific business would be considered a capital expense and you can claim it as a capital loss, subject to all the rules that apply to a nonbusiness capital loss.[/i]