Can I have business expenses without business income?

[vinceferraro]

As COVID ebbed last summer, I booked a number of training session (for which I would be paid) and bought equipment and supplies for those sessions. In addition to that, I had the home office expenses needed to book those sessions. The COVID resurgence ending up cancelling all of those sessions, leaving me with no business income for the year. May I still deduct the expenditures?

[ColeenD3]

You can deduct start-up expenses for a business with no income, but you need positive income for a home office. The IRS expects you to show positive income three out of every five years.

Start up costs are those expenses incurred in planning and setting up the business, costs you incur before you open the door.

A portion of startup and organizational costs can be expensed (written off in your first year). The remainder can be amortized (written off over a period of 15 or more years).

Here is how it works:

Expenses paid or incurred after October 22, 2004: 

 - You can deduct up to $5,000 in startup and $5,000 organizational costs as current expenses if the costs are under $50,000, respectively.

 - You can choose to amortize startup and organizational costs greater than $5,000, respectively, (but less than $50,000, respectively) over a period of 15 years.

 - If your startup or your organizational costs are more than $50,000, respectively, the excess amount reduces the amount you can deduct.

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Note: A cash-basis business cannot deduct or write off (amortize) these costs until they are actually paid.

[vinceferraro]

Thank you for the response. I should have clarified that this is a side business that I've had for a while. So, because this business has been running for several years, the answer is no?

I appreciate your response.

[AnnetteB6]

If the expenses are for an established business that you continued to operate in 2021 with the intention of making a profit, then the expenses are deductible as business expenses, even without any reportable business income.

However, your home office expenses may not be deductible if you are claiming actual expenses.  They will be carried forward to future years when you have a profit.  

@vinceferraro