Do I claim small business losses on fourth year of losses

Forum|Forum|6 years ago
July 10, 2020
1 reply
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TurboTax Home & Biz Windows

AmeliesUncle

Level 15

If it truly is a business, yes.

But with 4 years of losses, you need to reassess the situation to determine if it actually is a business, or if it is just a "hobby".

https://www.irs.gov/faqs/small-business-self-empl[product key removed]ess/income-expenses/income-expenses

BillM223

Level 15

AmeliesUncle's is correct. If this is a legitimate business (I assume it is on a Schedule C) then if you properly document income and expenses, you can file with a loss for the 4th year.

Note, however, that the longer this streak continues, the odds increase that the IRS will write you and ask you to show that you have a plan to make a profit or if this is, indeed, just a hobby. If the IRS determines that it is a hobby, then all losses are likely to be disallowed.

@AmeliesUncle - note that the link does not work.

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