I am not an attorney or an account but have been down a road similar to this before.
In the following I am assuming your invention activities are not your full-time job.

You can deduct these expenses but must report it against income arising from this business activity.

For Federal Income Tax purposes you would likely need to file a Schedule C listing your business income and expenses; the net profit or loss can then be applied to your personal income. Some expenses may have to be amortized over time.

Its OK for a limited number of years to report your expenses with no income as a loss against your personal income. Most businesses don’t make a profit initially. However if it went on “too long” the IRS would consider you to be running a ‘hobby’ not a business and disallow such deductions.

Your local or ste government may have further requirements about declaring your business – i.e. registering as a DBA or something else.

Consult an accountant and an attorney for definite answers.

Hi Susan, Take a look at at
http://articles.moneycentral.msn.com/Taxes/TaxS...
I had heard of the 3 out 5 year rule, but the profit motive is really the key. Also spending money on patents is probably viewed differently by the IRS than spending money for a week in Hawaii on a fact finding mission.