Schedule C Line 7

Forum|Forum|7 years ago
June 1, 2019
1 reply
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Last year I made no sales ($0 income) in with my sole proprietorship, although I did have expenses. I noticed in TurboTax right before I was about to file that the Schedule C line 7 was blank. In fact, lines 1-7 where blank. My concern is that line 7 should reflect $0. It looks incomplete to me. I am worried it will be a flag to the IRS, as if I perhaps forgot to include the income amount. Please Advise

TurboTax Self Employed Online

Anonymous

That's perfectly typical and blanks are as good as $0. You can still claim business related expenses, even though you had no revenue.

You can deduct expenses as long as you can prove that you opened or were in business in the year expenses were incurred. To be deductible, a business expense must be both ordinary and necessary.

Also, the IRS expects that if you start a business, you intend to make money at it. If you don't, your business is likely to be a hobby, if which case you can only claim expenses to the extent of your hobby income. To determine if your business is a hobby, the IRS looks at numerous factors, including the following:

Do you put in the necessary time and effort to turn a profit?
Have you made a profit in this activity in the past, or can you expect to make one in the future?
Do you have the necessary knowledge to succeed in this field?
Do you depend on income from this activity?
Are your losses beyond your control?

As a Business, you are considered to be self-employed. You report both income (if any) and expenses on Schedule C/Business Income & Expenses.