Business shows no income

[Donaldewingate]

I have 3 business setup in TurboTax Home and Business.

2 of the business's show profits.

The third business is new and does not show income. It is a land residential subdivision.  The cost of building the development was amortized into the land.  

I am now in the stage of maintaining the grounds and roads in the subdivision, while the divided lots are put up for sale. When I expense, expenses incurred with this maintenance (example fuel for mowers, tractors, etc.) Turbo Tax is not lowering my overall profit and taxes owed. Why are those expenses not lowering my tax burden?

Thanks in advance.

DT

[DianeW777]

It depends. There are two factors that determine allowable loss.

1. First is 'active participation' - you must be sure to answer this question correctly with a 'Yes' in the rental activity if you make all the decisions about the rental, even if you have a property manager.
2. Second is income - Maximum special allowance. The maximum special allowance is: 
   • • $25,000 for single individuals and married individuals filing a joint return for the tax year, 
   • • $12,500 for married individuals who file separate returns for the tax year and lived apart from their spouses at all times during the tax year, and 
   • • $25,000 for a qualifying estate reduced by the special allowance for which the surviving spouse qualified. 
     • If your MAGI is $100,000 or less ($50,000 or less if married filing separately), you can deduct your loss up to the amount specified above. If your MAGI is more than $100,000 (more than $50,000 if married filing separately), your special allowance is limited to 50% of the difference between $150,000 ($75,000 if married filing separately) and your MAGI. Generally, if your MAGI is $150,000 or more ($75,000 or more if you are married filing separately), there is no special allowance.

If your income below the is over the threshold above for your filing status your loss will be suspended and carried forward.

• IRS Publication 527

Use the Search (upper right) > type rentals > click the Jump to... link > Review Property Profile or Property Info

• Active participation (be sure you have selected this).

[Donaldewingate]

Thank you for your explanation Diane.